It is pretty simple - The cyclone slows down the velocity of the dust, allowing the larger bits to drop down and out of the waste stream. The finer bits still in the stream exit the cyclone and go to a rigid or fabric filter.
The sequence can be: Exit the shop, Cyclone, then Fan, then Filter, then return to shop. This allows the large bits to drop down into the collector before they go thru the fan. This keeps the shavings big and fluffy. Or it can be: Exit the shop to the Fan, then to the Cyclone, then to the Filter.
If you vent your pipe to the outside, you may be drawing down your heating system (forced air). That is, since you are venting outside, that pressure may be greater than the exit pressure from you collector. This will make for a dangerous situation in that Co2 may be drawn down the system into the shop, killing the inhabitants. Adding a way to return air to the shop will prevent the danger. Or just having your collector inside the building will eliminate the Co2 problem.
I built a room on the side of my shop that is 4' x 4' x 10' The fan and cyclone are in the top of the room. There are two access doors outside - one high, and low. All the shavings drop out of the bottom of the collector there, and the fines go to be filtered. The fabric filters are in the shop so the pressure is equalized.
I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center.
- Kurt Vonnegut