Hi Guy,
The tool is designed so you can adjust the length of the drill bit to suit the type of brass bearing you are using by means of the two small grub screws that hold the drill bit.
Not sure if you have one of my tools, but they do come with an instruction sheet on how to use it which covers how to set up the drill bit.
Essentially, you need to measure both the depth of the brass bearing you wish to use, and the available depth of plastic on the back of the axle box you're drilling in to.
Providing there is enough depth on the axle box, the drill bit can be set to the required bearing depth and the tool is designed so that the face of the drill end acts as a natural stop to stop you drilling all the way through.
That's step 3
As for step 4, the tool is adjusted using the screw thread to the required width so it just puts pressure on the surface you are drilling into. As you turn the tool it will cut into the plastic and become loose between the W irons. A simple half turn of the two halves of the tool will extend the length of it via the screw thread and it will become tight again.
It's really very simple to use and has taken me longer to type this than it would have to do a wagon.
Hope that answers your question, but if not, please ask again and I'll see if I can clarify it for you.
Regards, Tom