According to Shaq, the whistle connects directly to nearby Airships engines and engages them. It then sends out a homing signal to draw the Airships in for an attack run on a frequency that humans can't hear and that human technology wouldn't know to look for. However, it can't be used to direct Airships somewhere else as a different signal is needed for that.
The inside of the whistle contains a red crystal that when twisted lights up. This presumably acts as a power source or the source of the whistle's homing signal.
Using a Volm communicator, the whistle's homing signal could be captured, effectively making it so that the whistle's only purpose is to engage the engines of any nearby Airships. At this point if the whistle is blown, any nearby Airships will start their engines and lift off into the sky.
As part of their re-education, children being brainwashed were given the scout whistles. The purpose was that once the children found outside human groups, particularly ones who held trust in them, they would blow the whistle which would summon an Airship strike on the position followed by an attack by the Team Leaders.
When Cochise, Anne Glass, Daniel Weaver and Tom and Matt Mason visited a Volm supply cache, they found Mira, Matt's girlfriend in an Espheni re-education camp and the two explained the whistle and its purpose when asked about it. Mira claimed that she'd thrown hers in the river, but after Matt untied her, revealed that it was actually hidden in her shoe and blew it, summoning an Airship strike that destroyed the supply cache. In the skirmish that followed, Mira's whistle was taken from her, but she escaped while the other Team Leaders were either killed or stunned.
Following their return to Chinatown, Tom gave Dingaan Botha the whistle as he and Shaq were working on the controls of a crashed Airship, hoping the whistle might help them figure it out. The next morning, Shaq interrupted Tom and Anne's wedding to explain he figured the whistle out. After explaining its specifications to the group, he told them that while they couldn't use it to fly the Airship to the Moon, he had another purpose in mind for it. Having captured its homing signal in a Volm communicator so it wouldn't draw any other Airships, Shaq blew the whistle, engaging the buried Airship's engines and causing it to fly up out of the ground, effectively unburying it.