I have DT Swiss rear shock that I want to fit to Cannondale frame. The overall width of the bushes needs to be 21.8mm and 25.4 mm.

Looking at Chain Reaction website, the only one I found that sells them, I see they are avialable in that size (8mm bolt).

The photo below shows a pair of bushes. Am I correct in thinking the cylindrical part fits into the shock eyelet without a central tube, so the larger diameter end of the bush fits against the frame? Where do the o-ring fit?

(The Rockshox I am replacing has centre tube with two end caps)

You are correct, no center tube. The bolt itself is the tube. Small end of the little cone shaped spacers go against the spherical bushing, large end against the frame. O-rings go between the shock bushing and the spacer, to provide a little sealing.

The DT-Swiss rear shocks are designed to remove potentially damaging sideload stress from the shock through this "ball and socket bushes" and the O-rings work to provide cushion to this movement - like cartilage on your knee joints.