The wood starts to decompose and char. Smoke starts coming from the wood. The wood is being worn away. The temperature is beginning to rise from 400 to 700 degrees. The temperature of the fine wood particles being abraded off the junction between spindle and hearthboard rises to above 700 degrees.
Ignition takes place if the particles are fine enough.
Ignition will not happen until the temperature gets up to a critical level and the critical level depends on the fineness of the wood particles. You have to get a charcoal briquette's temperature up to about 1100 degrees before it starts to burn. When full power is applied to a damp spindle and hearthboard then the material is worn away before its temperature is high enough to cause ignition. Evaporation of moisture in the wood is a major source of cooling. In order to get ignition you must get rid of the moisture before trying to create an ember.