The light is sort of mechanical, it illuminates when the spark plug fires and is measured against the engines timing scale, pointers and the balancer or flywheel marks. The advance functions accuracy can be confirmed by comparing the results to those marks. When I rebuild a sbc I confirm the accuracy of the tdc timing marks on the harmonic balancer to the actual tdc of the piston, which can be off a bit. Your final timing adjustment is going to be set where the engine runs best without pinging regardless of where it's set on the scale. Your light offers a point of reference to advance or retard. The other functions of the light is a little concerning. I feel the tach is close enuff, volts tells me it's charging, as for dwell, I run an hei distributor.
