@BAC1967 has the answer. As to how it works ... does the distance between the wires change when you turn the knob? In which case, you can quickly measure the length of an object (or rather, of its image) in a microscope or other optical device. Slotted tubes are usually to prevent the eyepiece falling out too easily.
Turning the knob moves a marker against the scale so you can get a precise measurement. The scale will change depending on magnification so you need to calibrate the scale to a known measurement. I have a micrometer scale that I put on the stage for calibration. I don't know of a microscope that had a slotted tube but there were a lot of different makers back when that one was produced, like AgX said, it could just be a stop.
The one thing it has that mine doesn't is the two adjusting knobs either side of the eye piece. Looks like they may be for fine tuning the focus but usually eyepieces are fixed.
I'm sure someone on the MicrobeHunter.com Microscopy Forum would know more about it. If Jon wants, I could share his photo on that forum and find out more about it.