It used to work as a 100% crafting cheat. You turn it on and you could instantly make any craftable object in the game. With the Elegy update, now the crafting works just like you have discovered. You can make any craftable item as long as you have the tools for it with almost a zero time lapse.
You do not need a work table or furnace, but you do need a heavy hammer, hatchet, knife, sewing kit/fishing line, and tools.
One of the reasons why it would be awesome to get the item spawner hack back, but I don't know if it's possibly with the change in the game code.