8mm threaded rod is 1.25mm pitch so one rev of the motor = 1.25mm movement. The motor has 200steps/rev so 1 full step = 1.25/200 = .00625mm and if it 1/8 microstepping 1 microstep = .00625/8 = .00078125mm which is 1280 steps/mm or 32512 steps/in. Step pulse and direction pulse are the pulse widths needed for the driver to recognise the pulse. 5 is a good value to start with.

All this is explained in section 5.5 of the MACH3 manual