This is an actual oil. Most commonly used in pneumantic air tools and the oilers for drills, etc.
As for my experience in it, Dad usually puts a drop of ATF in the oiler for his air tools. If need be, he'll put some in the coupling on the tool, plug it in, hold it out, and pull the trigger. Cycles the oil around and then wipes it down after some of it is expelled out the exhaust of the tool.