All of the inlay kits of this nature limit you to the diameter of the bit so the larger the bit the larger your inlay has to be. For smaller work the 1/8" bit lets the template radii be smaller thus letting you do smaller inlay.
The kit you gave a link to limits you to the use of 1/4" so the inlay you make will have to be bigger than a 1/8" kit would allow you to make it. If all you want to do are larger inlays then this set up will give you good results.
The instructions say "If your router bit cuts oversize, the recess will be oversize, and the plug will be undersize, giving a sloppy fit. There is no way to compensate for this." but, you can use aluminum tape (other tapes can be used but this is my preference) on the pocket bushing and get a smaller pocket.
So the smaller the inlay you want to make the smaller the kit you need and don't forget you can make adjustments so things will work out even if the bushings or bit are a little off in size.
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