It's a small version of a radiator thermostat as i remember, I looked at one years ago. The oil comes out the offcentre hole and returns through the centre hole. The adapter collects the oil from the feed hole and sends it out the fitting that connects to the big cavity on the engine side. Return from the cooler goes to the small cavity on the filter side, to fill the filter housing and pass through the filter and return to the motor. Cold, the thermostat is open between the small front cavity and larger rear cavity. That lets oil pass through bypassing the cooler, the cooler will still have some flow but most should bypass it. Hot, the thermostat closes that "shortcut" so oil from the motor must go through the cooler to get across the adapter.