Not a stupid question at all.
As EdiBrunsVic explained, the speed adjustment knob or lever on most acoustic gramophones is used to speed or slow down the turntable, because not all records produced during the early days of recording were recorded exactly at 78 RMP.
The gramophone you purchased was made for playing the shellac based 78s produced at the time it was manufactured -- in the late teens or early 1920s. LPs or 33 ⅓ rpm records were not introduced until 1948, and were designed ONLY to be played on electrically amplified record players, using light weight tonearms and jewel tipped needles or styli designed to fit their very thin groove (about ⅓ of the size of a 78 rpm record's groove). Keep in mind, LPs are made out of a vinyl based material that cannot withstand the weight of the tonearm or sound box used on an acoustic gramophone. (In contrast,
most 78s were pressed out of a much harder shellac based resin.)
The only thing the guy in the youtube video is doing is ruining his record. It also sounds
horrible. Compare that to this video showing a restored gramophone similar to the one you purchased, playing a 78 from circa 1929:
[youtube]
http://www.youtube.com/watch?v=-793nF633pU[/youtube]