The drill bit does go into the handle and would appear to normally be stored there. The drill bit also has a small hole near the cutting end. The whole tool with bit inserted inside is 5 3/4 inches long. There is no way to use the drill bit when it is stored inside the tool. And the drill bit does not separate from it's knurled handle.
The three pieces at the opposite end from drill storage expand as the smaller knurled portion is screwed into the larger knurled portion. This would appear to be to hold it in place in a round opening. The surfaces of the expanding pieces are smooth and polished with no abrasive marks.
