It's certainly not original to your lathe, and it looks like it probably is home made. It may work perfectly fine once you understand how it should work, and figure out how it's graduated.
First, as suggested above, you will need to check engagement with the lead screw. The "pitch" of the gear, must correspond to the pitch of the lead screw. In other words, the spacing between the teeth must be such that they engage the threads of the lead screw and the gear can roll along the screw without binding or jumping teeth.
Once that's established, you can figue out how it's graduated. WITH THE SPINDLE STOPPED, move the carriage left or right so one of the long lines on the rotating dial lines up with the mark on the bezel. Mark this line "1" with a sharpie. Next, mark the position of the carriage on the bed with a sharpie. Move the carriage (the same direction you moved it before) until the next long line comes around to the mark on the bezel. Number this line "2", and make a new mark on the bed showing the carriages new position. Then do the same for the remaining line.
By measuring the distance between the marks on the bed, you can figure out how this dial will work on your machine. A thread dial is a very simple indicator of relative movement between the lead screw and carriage position. As long as one complete revolution of the thread dial corresponds to a whole number of inches, you can mark out each inch on the thread dial. Since you lead screw is 8 TPI, the half nuts will engage every eighth of an inch, or eight places per inch.
The thread dial in the chart shown above shows four inches of movement per one complete revolution. Each of the numbered lines correspond to one inch of relative movement, each of the shorter lines is one half inch of movement. Note that on your lathe, there would three places between each line where the half nut could be engaged.
For cutting:
8TPI, or any multiple of 8: Engage on any inch or any eighth (anywhere the nuts will close)
Any number of threads divisable by 4: Engage on any inch or any quarter inch mark
Any even number thread: Engage on any inch mark or any half inch mark
Any odd number thread: Engage on any inch mark