threadless headsets are composed of upper and lower bearing races. the steerer tube of the fork is a plain tube, cut to length (3mm less than the stack height of everything). there is a star-fangled nut inserted into the top of the tube. the stem is a sleeve that fits around the tube. a cap sits on the top of the tube with a bolt that passes through it and the starnut. it is wider than the stem, so as the bolt is turned it presses the cap down on to the entire assembly, compressing the races and tightening everything up (which is why the 3mm clearance). once this is done the stem bolts are tightened, so that it grips the steerer tightly.

threaded are…

oh f@ck it, over to sheldon
http://sheldonbrown.com/gloss_ha-i.html#headset