Complex sentence: Letters are preferred, but if necessary digits 2 through 9 may be used, excluding "0" and "1" to avoid confusion between "O" and "0" and between "I" and "1".
Split into simpler sentences: Letters are preferred, but if necessary digits 2 through 9 may be used. Excluding "0" and "1" avoids confusion between "O" and "0", and between "I" and "1".