Caveat: I don't teach on the M3 (if wishes were horses...) nor have I been to any workshops from Keiser. I do use a power meter on my road bike and I have read a whole heck of lot.
Short answer: Watts can be considered a measure of effort similar to using heart rate or perceived rate of effort (albeit far superior). Establish a baseline and use that to create your zones. How do you create a baseline? Perform a functional power test (FPT).
Have the group warm-up for 15-20 minutes. With the M3, stop pedalling for about 30 seconds - this will clear the computer.
Depending on your group (road riders can go longer, fitness riders shorter) have them ride as hard as possible for 10 to 30 minutes at a constant rate for the whole ride. That is the tough part for some participants - they go out too hard initially and die towards the end. At the end of the test period, riders stop pedalling. The M3 will (I think after 10 seconds) display the average power for the ride. That is the functional power for the rider. They need to record or remember that (best to write it down).
Have the group cooldown.
Rides are now based on that power level. You will do rides that are 70% or 115% depending on intent. Riders adjust their resistance and cadence to be suitable for the ride, with the goal of maintaining power in the correct zone.
The FPT should be repeated periodically to adjust for changes in the fitness level (hopefully improvements). Depending on training levels, it can be repeated every 8-12 weeks.
Long answer: Check out the following -
Saris, manufacturers of the PowerTap power meter for bikes as well as the CycleOps indoor bike. They have an incredible amount of information on training with power.
"Training and Racing with a Power Meter", Hunter Allen and Andrew Coggan, Ph.D. Publisher: Velopress
Jennifer "Funhog" Sage's eBook "Keep it Real" discusses it as well. http://funhogspins.blogspot.com