This particular machine is an embroidery machine. The dongle is used to store embroidery patterns and to calculate stitches needed and where on the x,y grid, and to calculate which stitches are what color.
The display on the right side of the machine is for entering the resulting size that you want and to display real time a progress report on the stitching, and a display of the finished pattern.
The dongle is initially plugged into a computer to receive pattern data for an embroidery design down loaded from the internet. It also receives data from a computer program for deciding "IIRC" resolution and stitch colors for a particular design.
The above explanation is how I understood the explanation from my wife. Any information given to me beyond that is somewhere in my brain's corrupt FAT.