You tighten it by turning it in, clockwise as I recall. It's basically just a nut that puts presure on the diffential and locks up both wheels if you make it tight enough. It uses a cone-shaped brass clutch. The more you tighten it, the more friction is created between the two back wheels so they cannot turn independently. Sort of a "poor mans" posi-rear or locking differential. So, in theory if you really jam it tight, you get full two wheel drive and no differential action.
Also there is pin you can pull out so there is no wheel drive at all. that so you can roll it if the engine doesn't run.