They are used on lathes to cut profiles and contours that would be difficult or near impossible manually. A flat template is created that mounts on it and contact is maintained on the template by a tracer pin that is connected to a hydraulic valve. The hydraulics control the X axis of the lathe, so that when you engage the Z axis feed, the cutting tool makes a cut that matches the template. The templates are a little tricky to make, as you have to allow for the contact pin diameter.
I imagine that they aren't all that popular nowadays, with CNC all over the place, but at one time, production shops used them extensively. I ran one on an American Pacemaker for a while. Kind of boring after a few days of watching it. They don't thread, but turning and boring work they do pretty good.