Spade bit with braces. Source
A spade bit is considered a signal bit, as the horse feels the bit begin to rotate in their mouth, they know to collect up and prepare for the riders coming cue. This is different from a snaffle bit, which is used to actually move the horses head and neck in order to show them what the rider wants. If a horse needs guidance on how to position their body, they are not ready to be ridden in a spade bit. It's also different from a curb bit which uses leverage to communicate the posture that the rider would like the horse to take. For some excellent photos and a more in depth explanation of spade bits check out this article by Mark Bridges. These bits were used originally by cowboys spending long hours working from horseback. Their work required the horse to be easily guided with very little movement from the rider's hands. Here's a video of a bridle horse in training. He is being ridden in the 2 rein. He still has a small bosal hackamore in addition to carrying and receiving signals from the spade bit.
This is another great video showing the mechanics of the spade and explaining a little more about its function.
Hopefully this information has helped you better understand a piece of tack that is commonly misunderstood. I know I learned a lot :)