Here is how I interpreted the explanation. First, workers loosen something that allows the wheels to slide along the axles. Then:

I picture the rails being firmly in place, but gradually narrowing in gauge, thus forcing the previously loosened wheels into the smaller gauge, as the outside of the flanges rubbed against the inside of the rails.

To widen the gauge I pictured the rails, again firmly in place, gradually widening in gauge and with inner guard rails forcing the inside of the flanges (and wheels) outward to the larger gauge.

After the operations described above the workers would tighten something to prohibit the wheels from sliding along the axles.

Does that make sense?

Best regards to all.