So if I understand right, after using the stone it then becomes like a mana stone that can be used to stat other gear?
like if I had a cloth armor with a dex stat on it, the stone can remove the dex stat, allowing me to add six stats of my choosing, then add the dex stat to say a leather armor if I wanted?
Yes, if your gear has one stat, you get clean gear and a mana stone with the stat that used to be on it. You can then sell it or use it.
Your scenario is accurate, although I am not sure how dex stat got on the cloth armor in first place.