The Stepover type controls the type of transition move that is inserted between toolpaths. The choices are:
Direct: The tool moves straight over to the next position. The tool can move in all 3 axes. This figure shows a direct stepover move on a flat surface feature.

Arc: For Z-roughing only, the tool attempts to connect to the next position with an arc. (If that is not possible, an arc and several tangential lines are used). For Z-roughing, only Direct and Arc apply.
Stair step: The tool moves up in Z and then over in X and Y. This figure shows a stair step transition move on a spherical surface.

This figure shows the same surface feature using a direct stepover.

Loop: The tool makes an arc move out of one toolpath and an arc move into the next toolpath. These transitions are actually programmed from linear moves and may move all three axes. This figure shows a loop move on a flat surface feature.
