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saptamy adhikaraNe ca

सप्तम्यधिकरणे च ONPANINI 23036

The seventh means location too.

Or more verbosely —

Add a seventh ending to nounbases that mean the place where something happens.

So when we say things like "the cat sat on the mat", the mat is the place where the action of sitting happens —

khaTvA- खट्वाॱ "mat" + /Gi
→ khaTvA- खट्वाॱ + yAm याम् by yADApaH
→ khaTvAyAm खट्वायाम् "on a mat"

Asta khaTve biDAlaH आस्त खट्वे बिडालः "the cat sat on the mat"

Something like asti अस्ति (from /as, "is there" or "exists") counts as an "action" too, so we may say —

AsIt khaTve biDAlaH आसीत्खट्वे बिडालः "there was a cat on the mat"

And actually the idea "is there" will be understood in simple sentences with no verb, so we can remove any verb meaning "is there", like asti अस्ति or vidyate विद्यते —

khaTve biDAlaH खट्वे बिडालः "the cat's on the mat"

and the khaTve खट्वे word still counts as location and still gets seventh.

What is the "too" doing in the sUtra?

It adds the "saptamI सप्तमी" worf to < dUrAntikArth.... You may use seventh ending too after words meaning "far away" or "near", as well as the second, third and fifth.

vanasya dUre वनस्य दूरे "away from the forest"
vanasyAntike वनस्यान्तिके "near the forest"
tad dUre tad antike |
तद्दूरे तदन्तिके ।
"it is far away, it is nearby"