Looks like there's a detent ball on the headstock that fits into the groove in the pin. Move the pin forward to engage a hole in the indexing plate - you probably already know this. What you may not know, is that you can set up a carriage over the work piece, a router rides the carriage lengthwise and cuts things like flutes equally spaced around the circumference of the work piece or say, mortices at 90 deg to each other, for table legs.OK, thanks.......so how do you use it?

OK, I get it now. It locks the piece in the lathe at a specific spot so you can use another instrument (plane, router, etc) to form horizontal patterns.-As others have already posted this is an indexing feature. The link by @paulsomlo is an example of how to create features on something that would be more difficult to do by hand on the bench. Using a sled that locates, moves the bed length, or crosswise opens up multiple possibilities. What can be created is only limited by your imagination. Another example of an aesthetic detail is below. The indexing capability is a nice feature to have on any wood or metal lathe.
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