You may be talking about a setup pin used to make sure that your router is mounted perfectly to your baseplate. If you use template guides, and the router is just a little off of center, than the distance between the template guide and the cutting edge of the bit will vary, leaving an wavy cut if the router is rotated any as you are cutting.
If you chuck up a centering pin, or bit, in your router, then put a small template guide in, you can then check that you have uniform clearance and the router is centered.
(If you don't work with template guides, you don't need to worry about using one. If your cheap - like I tend to be - chuck up the biggest straight cutter you have, find a brass template guide has the same diameter, and make sure the bit turns freely inside)
Hope this helps,