Drill Sockets add additional Gem Sockets to equipment. Gems Setting allows proper setting of gems into Sockets.
NPC - Gong Liangxin:
Guiding Quest in Heavenly Dragon Castle
You can get different gems from training. You can use the gem to enhance your equipment, but only those items with Sockets can Enchase Gems.
Equipment can randomly have 0-3 Sockets, but you can also Drill Sockets into your equipments to increase the number of Sockets.
A piece of equipment can have 5 Sockets in total.
You need a Drill Tool to drill a Socket, and a Drill can be made by the Refining Skill.
Use the drill and choose the equipment you want to add a Socket to.
There is a chance of failure when drlling, but you'll just lose the drill if you fail.
(Tip: The more Sockets an item has, the more difficult it is to add more sockets)
Regardless of what kind of equipment reinforcement you carry out, there is some risk that it can be successful or fail.
You need to be prepared for this. The cost for success and failure is not the same. For some failures, you might only lose materials, while for other failures you may lost potential credits as well. The equipment will not be destroyed completely, though, so you do not need to worry too much.