How does NiosII communicate with other FPGA blocks

As I know you need not to add any component called Avalon bus since SOPC Builder by default does all the connections to cpu thru Avalon. You know what all signals you need to connect to Avalon signals. Make an HDL entity where you interface Avalon signals with ur user logic. And add the HDL file of this interface as a new component in SOPC Builder. Read "Avalon Bus Specification" for details on what all signals you require for interfacing with Avalon.