Hi Look,
Its very simple in concept the router bit is just a point, maybe 60 degrees. There is a plastic bushing which starts out at the diameter of the dowel and then just past where the bit enters the bushing it is threaded, so as you turn the dowel in the bushing, the bit starts cutting the thread groove which then enters the threaded portion to properly space the threads.
They make several sizes 1/2, 3/4, 1, 1 1/4 and 1 1/2. I need to get the big ones out someday to make an adjustable stool or two.