i couldn't really figure it out either, but a bit of online searching all came back with much of the same response;
1960 Land Rover Restoration: Thermostat and Housing
How a Land Rover skirted thermostat works
Land Rover FAQ - Repair & Maintenance - Series - Drivetrain - Skirted Thermostats
I've recently put on a new water pump(putting the fan on backwards at the same time :bat:) and new 4 core radiator, plus new hoses and gave it a flush, and realized something was wrong when I couldn't fit a new skirted thermostat. I put the flat type back in but it obviously isn't working to how the cooling system was designed. I'll keep playing around with it today, may just take it out for the summer though.

