The basis is to have a workpiece that has a center section turned smaller so that it leaves two larger diameter rings, one near the headstock and one at the opposite end. You can then take a small cut off one ring, then without moving the crosslide go down and take the same cut off the other. Measuring both rings will tell you something. Most often (?) the test piece is held between centers so this will tell you how much the tailstock must be moved to be centered - that is, to cut a piece with no taper.
Used with the RDM, the piece is not supported by the tailstock but is in free air. In this case what it purports to tell you is whether the bed is twisted one way or the other.
This is a great method for tailstock alignment but I'm a little hesitant to call it good with RDM. To get the best resolution you want as long a workpiece as possible, but with that much hanging out of the chuck the probability of deflection muddying the waters I think is too great to be reliable. YMMV
"I am often asked how radio works. Well, you see, wire telegraphy is like a very long cat. You yank his tail in New York and he meows in Los Angeles. Do you understand this? Now, radio is exactly the same, except that there is no cat." : Albert Einstein