I am trying to mill M5 x 0.8 internal threads. To get the threads large enough to pass a M5 bolt, I have to set the diameter to 7.0 mm.

It is possible I have something in the tool geometry wrong. The tool is a single edge (as opposed to a comb type) cutter with 4mm cutting diameter and a 2.9mm shank relief. Below is the geometry I have set.

Here are the cutting parameters I had to use to get the diameter correct.

I am not sure why I need to enter 7mm. The best idea I have is that the entry diameter doesn't correspond to the minor diameter of the cutter, possibly. I am also certain this is one of those situations where I don't know what it is I don't know. I appreciate any enlightenment available.