Have a read of the Mach3 turn manual, as it explains tool offsets pretty well.
The one thing I will say, is they're far easier to handle if you have accurate homing on the X-axis (Z axis is less critical as you can just bump of the end of the stock).

With mach3 you want to be using the Txxyy format, where xx is the tool position, and yy is the tool offset to use. It's meant for turret setups where you swap tools in each position.