Reverting to the original query.
Since the lathe appears to have a gearbox in the drive between thye spindle and the Leadscrew, fewer changewheels will be required to cover a range of threads, or feed rates.
Is the 127 – 120 gear a compound one?
If so it is intended as an Idler to provide an easy means of changing to screwcutting an Imperal thread on a lathe with a Metric Leadscrew, or vice versa.
Assuming that your machine has a Leadscrew with a Mteric pitch, using the gear as a simple Idler will allow you to produce a thread with a Metric pitch.
If the drive is taken to the 127 T side of the gear and onwards via the 120T section, that should allow an Imperial thread to be cut.
The pitch of the thread can be arranged by the settings of the 2 knobs and 2 levers on the lower part of the control panel, (As by now you have learned from the Warco and Grizzly manuals. )My own lathe, not a Warco GH1322, has a 3 mm pitch Leadscrew, and uses this method, between the spindle and the gearbox.
Because it has a gearbox giving a large number of ratios, only two change gears are required to cut most of the standard Metric thread pitches, (0.25 to 7.5 mm pitch ) and the 127 / 120 Idler allows an even greater variety of Imperial threads to be cut. (From 4 tpi to 112 tpi with just one change wheel )
By suitable arrangement of the knobs and levers the GH1322 will provide an even wider range of threads, and feed rates to be produced.
What you are doing is setting up a suitable ratio between the Spindle and the Leadscrew to move the Saddle a given distance for each revolution of the spindle.
So, IF the lathe had a 3 mm pitch Leadscrew, and you wish to cut a 1.5 mm pitch thread, you would set a ratio of 1:2 between the spindle and the Leadscrew. In this way the Saddle would rotate more slowly than the spindle., and move 1.5 mm for each revolution of the spindle .
You would do well to buy and read Martin Cleeve's booik, No 3 in the Workshop Practice Series, "Screwcutting in the :Lathe". Another good book, on the subject is Brian Wood's "Gearing of Lathes for Scxrewcutting"
If you are new to using a lathe, it would be worth buying some of the books available on using a lath, to learn the basics..
Suitable authors would include, Former editors and the current editor of Model Engineers Workshop, such as Stan Bray, Harold Hall and Neil Wyatt. L H Sparey "The Amateurs Lathe" and Ian Bradley "The Amateurs Workshop" although older, will provide some enlightenment.
When you are setting up a feed rate for turning, you are effectively setting up the lathe to cut a thread with a fine pitch, but using a cutting tool which should provide a smoother finish. The object is still for the Saddle to advance at a rate related to the rotation of the spindle. So a feed rate of 0.05 mm per rev would requires a reduction ratio of 60:1 between the spindle and the 3 mm pitch Leadscrew..
One of the best ways to learn, is to get some mild steel, grind suitable tools, set them to centre height, and start cutting metal. You will make mistakes, but you will learn from them. (We have all trodden that path! )
Howard