The basic function of the gauge is just as simple as it seems. If you drop a round in, it should drop in freely, and the top of the case should sit somewhere above the bottom step and below the middle step on the face of the gauge. If it is somewhere in that range, it should fit into an in spec firing chamber without any issue.
Because this is designed to check that your brass will fit in ANY chamber, it is not recommended for use when the brass is only neck sized. Neck sizing is commonly done with bolt actions, where the goal is increased brass life by minimizing the amount of reworking done to the brass. While neck-sized ammunition should fit the chamber of the rifle it was fired in, it may not fit other rifles, and likely will not fit in the gauge.
Ammunition used in semi automatic rifles is typically full length sized for reliable feeding/chambering. This ammunition gauge is designed to work with full length sizing.