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This is used to set the Tool Diameter Offset (an integer) for cutter compensation / tool wear compensation at the controller. Generally this is set the same as Tool Number.  The posted code would output D<#> and the # corresponds to the offset value in the controller’s tool table.

For example

N30 G41 X 2.0 Y 1.0 D1

Where D1 points to the controllers tool table for diameter compensation.

Note the post processor needs to be configured to output the Cutter Compensation. Refer to Cutter Compensation for detailed description.