you can set preload by screwing that down on the spring. When you do it makes the spring pressure more. When you take the bike off the stand there should be a little sag from the weight of bike (free sag). When you sit on it there should be more (race sag), you set that by tightening the nut down on spring. Hope that helps. I don't know what you would want to run for race sag. For my quad I set it 1/3 of the complete wheel travel. Since I have 9 inches of travel I set the race sag at 3 in. Preload is just tightening the nut down (preloading it).
What does the preload part mean? I know cyclerider57 said it was for the sag. But does it affect anything else if i turn it? Like if i put the nut all the way down (towards the res) what will that do? Or if i put the nut all the way up (towards the rebound knob) what will that do?
Right, If you tighten it all the way you will have NO sag. The back end will be VERY stiff. You'll have a LOT of sag and it will be very soft if you bring it out all the way. If you have to tighten the spring down to make it stiff enough for you and when you get it right then it has NO sag then your spring is to soft for your weight. If you have to soften it to where you lose a lot of wheel travel because you have so much sag then the spring is to stiff for your weight. Call I-shock and see what the recommend for sag. They can probably recommend a spring setting for your weight. Generally, once you have the preload set ONCE you DON'T need to change it again. You use repound and compression knobs to set shock up for each track/ riding area.