The square is marked in 1/16-inch increments, with 1/4-inch above level, and 1/4-inch below the top plane of the square arm indicated with the fraction 1/4. Thus, your arrow is nocked almost 3/4-inch above the shelf, nocking under the red wrapped thread. The square arm is resting on the arrow shelf. The 0 on the bottom base of the square corresponds to the underside of the bow arm. You just read from the 0 upward.
This is a pretty typical nock point height for those shooting three under, but if you're constantly nock high, you could lower it a little, about 1/16-inch at a time, until the arrow leaves the bow straight.
The masking tape serves as a second nocking point to keep the arrow from slipping down the string at the shot. I usually use masking tape for both nocking points because I can easily remove and change them.