The small vee on the long piece of the jig is placed on the barrel just in front of the scope objective - being a vee it self-centres. Loosen the lock nut and bring the larger vee down to contact the outside of the scope objective. Now your jig is located exactly on the line between barrel centre and the scope centre. This line is probably not true vertical (yet), so move the rifle on whatever rest or clamp you're using until the bubble is centred. Your scope/rifle assembly is now true vertical, so you can rotate the scope (without moving the rifle) until the crosshairs match another true vertical reference - like a plumb bob.
If your question is instead about bore sighting with a torch through the ocular lens, I'll leave @zimmer to explain that one further. Sounds like something I need to try though.
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