Noone knows how exactly although he has told police he has devices all over the city.
Take it with a grain of salt. One news organisation (Ten, who are hardly exemplars of journalistic craft) have apparently claimed they've spoken to hostages in the cafe, who said that the gunman claimed he had a total of 4 devices in the cafe and around the city.
First of all, you have to assume Ten actually got in touch with bona fide hostages. Second, you have to assume they accurately relayed what the gunman actually said. Thirdly, you have to assume the gunman was telling the truth, and actually had placed devices around the city.
It's entirely possible there are explosive devices involved (I am MUCH more willing to believe they are only present at the cafe than anywhere else, though). But the police haven't said so. They've had officers wandering around looking in drains and things most of the day, but nothing more urgent then that. If there was a genuine, believeable bomb threat, again, they wouldn't be saying they believe this event to only be limited to the cafe, and they would probably have widened the exclusion zone, particularly at this time of the evening. I doubt they would be running trains or saying people should continue with their plans in the city, either.
At the end of the day, I'd rather err on the side of caution, and be proven wrong, then believe what really only amounts to hearsay and rumours at this point, and then get all amped up about that (which has happened before with these kinds of things). Either way, there's nothing I can personally do about the situation than pray.