That is a picture of my lathe when it was brand spanking new! It didn't even have power connected, fresh off the forklift!
As for the turret's function, there is a large diameter piston inside which when air pressure is applied, pulls down on the top turret and locks it into position on the eight alignment rails.
There are many types of tool holders for this turret, ranging from turning to facing to boring and angle turning! Then there is a holder with a 5/8 bore which can hold Geometric Die Heads and large boring bars! Also the basic drill chucks!