Think of it this way:
Iuz is a creature (just like any creature in the Monster Manual). He has 20 Hit Dice from being an especially powerful creature. Since he is an outsider, those Hit Dice are d8s (per the chart on page 13 od the MM). Added onto those 20d8 from being a 20 Hit Dice outsider are the extra 20d8 and the 10d6 from being a 20/10 Cleric/Assassin.
It's just like taking any monster and adding class levels.
For reference, I'll point your towards the Titan entry on page 176. An average Titan has 20d8+Con Hit Points, just for being a 20 HD Outsider. If you took a Titan with the same Con as Iuz and added 20 Cleric and 10 Assassin levels, you would end up with something comparable to Iuz (at least HP-wise).
Iuz could have just as easily had 14d8 or 6d8 HD as an outsider, but they gave him 20d8 to show that he is an extremely powerful outsider. I'm not sure exactly what type of base creature he is, though, just that it is a type of outsider.
I hope this isn't too hard to understand. It's really late (early?)and I'm sure I'm not making much sense.
Anybody else want to take a crack at explaining? Preferrably someone who is more well-rested...
