The collets clamp on a 3/4" diameter cylinder but it also allows the toolholder to have contact with the spindle nose. This makes tool length offset through the tool table possible as you can premeasure the length of each tool and it is repeatable. I find them worth every bloody penny when you have to change tools for a specific job as it saves having to touch off each one. In conjunction with the power drawbar you literally fly through.

The holders look like this one:

Click image for larger version.  Name: atcer25holer.JPG  Views: 702  Size: 52.9 KB  ID: 16823
Tormach in the US claim to have invented this but there are a number of sources out there that manufature them.

Needleworks probably has a set or ER20 chucks but you can get ER16 up to ER32.