How do i set the depth of the engrave

I am looking at inlaying a 4x4 tile into a piece of wood, how do I set the depth of the square engrave so it comes out flush?

What is the thickness of the tile? That is your pocket depth. If you are gluing the tile in then add about 1/16” to an 1/8” depending on the type of glue you plan on using. It would be the same for thinset.