That particular Regulator Post is made of 10# furled monofilament leader material. The "indicator" part of the post is orange poly-yarn. Closed cell foam works better, in my experience, but the poly is ok if it has been treated with Watershed or similar product.
The fly is tied up until the thorax then the post is tied on. The thorax is then built up over the "butt" of the Regulator Post. The thread is advanced and the fly is finished just behind the eye by lifting the post out of the way.
The fly is tied to the tippet at the hook-eye. The only thing the Regulator Post does is suspend the fly in the water column.
Let me know if you have any other questions.