The String Spacing Rule locates string positions so that heavier strings get the wider spacing they need. The Rule's spacing is proportional, so that each space differs from the next by exactly .004". This creates the comfortable string spacing that players expect from quality instruments.
Two sets of marks
There are two sets of marks on the rule (they overlap so that one set is located in the spaces between the other). The slots in one set are close to the rule's edge, while the other set is slotted farther from the edge. Use either set of marks, but don't mix the two: choose all your string locations for one instrument from the same set. If you mix the two sets, your strings will be irregularly spaced.
Decide where to place the two outside strings
Choose the locations for your two outer strings. (On a guitar, these would be the two "E" strings, and they're usually located about 1/8" in from the fretboard edge.) Mark these two positions on the nut or saddle.
Match your two marks to the ruler
Place the rule on the fretboard against the nut, and align any slot on the rule with your mark for the treble E string.
Count out six marks to the left on the rule (for a banjo or bass, count four marks). Be sure all of the marks are from the same set (either the set closest to or farthest from the rule's edge).
Slide the rule left or right until you find the group of six slots that best matches the width of your two outside strings.
Use the slots to mark places for the other strings
Use a scribe through the slots in the rule to mark the string positions on the nut or saddle. The scribe marks create a shallow groove which makes a good starting point for filing the string slots.