It's just a stop that allows three turns of the cross-slide handwheel. When you get to the end of the thread quickly turn the handle to retract the tool. On the return trip you add in your feed on the compound for the next cut then when it stops wind in the cross-slide until it hits the stop again, perfect every time. It takes some getting used to because you don't think it's going to stop accurately enough to avoid a dig-in but it works perfectly - so long as you don't change the rpm too much.
In reality the lathe isn't supposed to auto-reverse like in the vid, that was a bit of showing-off I was taking the last few final cuts and small in-feeds so I upped the RPM to keep the chatter down. Once you reach a certain RPM on a coarse pitch the momentum carries the saddle too far and instead of stopping it throws it straight into the opposite drive. It's actually quite a clever system there's a braking relay and an anti-plugging relay. You can throw it right into reverse and it turns the motor into a generator dumping the electric through a big resistor to slow it down. The voltage generated holds in the anti-plugging relay until it's sufficiently slowed that it won't cause damage then the relay drops out and it gets thrown into reverse.