That is for a dubbing loop. Check this out first: Dubbing Loop
Locking the loop like in #3 and #4 is really important. But I do this and the back of the hook. So make a loop with your thread(doesn't really matter if it is too long you can fix that at the eye) at the back of the hook and place the hook tool to hold the loop. Lock it off like in the link, then run the thread to the eye of the hook. I am going to say, this is where a rotary vise is the best. Put a knot in the thread by the eye now so it stays put. Take a clump of dubbing and with both hands keep pulling it apart so that the fibers end up all horizontal.
Put small batches in the loop, you want it to be on the thin side or the fly will end up WAY too bushy. Place the dubbing in the loop and slide it to cover say 3" to 5" of the loop, but try to keep them HORIZONTAL. Then spin the hook tool to make a rope out of the dubbing. It will end up looking like Mohair chenille.
Wrap the hook like you would with chenille. Tie off at eye and then brush it out. I use velcro to fluff.
Good luck....much bushier flies!