The standard is to cover all the plywood with tar paper. Start at the bottom, lay across the slope and overlap by 3 to 4 inches. You need to keep water off the plywood since wet wood won't dry under the shingles, it will rot. Usually 1/4" or so gaps are left open between sheets of plywood to account for temperature and humdity expansion, and any settling of the roof. You don't want the plywood binding and pulling away from the rafters.