If I have the right label for this piece of equipment, it is the stuffing box (maybe). It is where the "shaft" comes from the Transmission to a what ever is where the water drips from. Before I left the boat, I tightened the bolts to stop the dripping, placed a note on the throttle to loosen the bolts prior to starting he engines.
At the risk of telling you what you may already know, here is my understanding of the setup.
On a conventional system, the shaft passes through a tube or "log" that penetrates the hull of the boat. There is at least one cutless bearing (a hard, rubber-like collar with longitudinal grooves in its inner surface) centering and supporting the shaft inside the shaft log. This bearing is lubed and cooled by the seawater inside the tube.
Obviously, the log has to be sealed at the engine room end to keep the water from simply pouring in around the shaft. So there is a packing gland at the engine room end of the log that contains a sealing material--- originally flax, but there are newer synthetic sealing materials on the market if one chooses to use them-- that is mashed down around the shaft and against the inside surface of the packing gland.
The mashing is done by the packing nut, which is generally the forward of the two nuts on the packing gland. Tightening this nut compresses the packing material which in turn reduces the amount of water that can leak past the shaft and into the boat.
The nut behind the packing nut is the lock nut. When run forward and tightened against the packing nut, it locks the packing nut in place.
If the packing material is mashed down too tight, it can restrict the passage of water through the packing gland (the drip) and this and the friction of the packing material jammed hard against the spinning shaft can cause the packing gland and shaft to overheat, which can damage the gland and the shaft.
It's a trial and error process to get the packing nut adjusted correctly. Backed off too far and you get too much water coming through into the boat. Tightened down too much, and you get an overheated gland and shaft.
The trial and error adjustment has to be done with the shaft spinning, ideally with the boat underway.
Once the packing nut has been adjusted to the best compromise between cooling and dripping, the lock nut behind the packing nut is run up against the rear face of the packing nut and the two are tightened against each other. Then make one more check of the shaft log temperature to make sure it's still what you want, and that's it.
The above description applies to the basic, conventional packing gland system. There variations on this system, and there are the so-called dripless systems which use a different principle entirely (as I understand it).
Our boat has conventional packing glands but with cooling water feeds from the associated engine.