Shiplap is a basic style of overlapping siding board. Both the back side of the lower edge and the front side of the top edge of the board are notched along the entire length. When the boards are installed, the top edge of the board slides underneath the notched lower edge of the board above. This overlapping pattern creates a weather-resistant shell around the building. Making shiplap siding involves using a router fitted with a rabbet bit. The router and bit are used to cut the notches into each edge of the boards.
Set up your router. Install the rabbet bit. Adjust the height of the bit so you will be taking away 3/8 inch of wood. Then adjust your fence so that the notch will extend 1/2 inch from the edge of the wood board. Use your ruler to check and double-check your measurements.
Make a test cut on two pieces of scrap lumber to confirm that your settings are accurate. Use scrap material the same thickness as the boards you will be routing. Check that the notched boards fit neatly together. Make adjustments as necessary.
Once you've confirmed that your settings are good, go ahead and make the rabbet cuts on the back side of your siding material. Feed the material at a moderate pace, and press the back of the board snugly against your router's fence.
Flip the material over and make your rabbet cuts on the front side. Make sure your lumber is stacked and sorted in such a way that when you feed it through the router, the second set of notches is being cut on the opposite side and edge of the boards from the first series.