I was taught the practical purpose as I wasn't into theory memorization so I won't try to answer your why...
Rather than using a MM, ... I used an available bulb socket I had on hand with positive and negative leads and attached the alligator clips... Positive to the points bolt as you did and negative to the engine case. When the bulb just lights up, you have your set and lock down the screws.
Points gap plays into the equation too. If too small points gap, that effects the fire timing location. So rather than .012 try .016 points gap if you are having a problem setting the static timing.
Here's an old school bloke using a test light made from a turn signal. ...
Thanks Stu, for the "Old Bloke's" video link which provided a key piece to my puzzle. I've used a friends "buzz box" on other machines to set magneto timing. The idea is the same, a lamp lights and a buzzer sounds when the points open but the buzz box contains its own power source. I have a 12v bulb with soldered alligator leads around here somewhere, that I've used to test for power in 12v circuits, but never thought I could use it here. The missing piece to the puzzle, for me, was where would the power to light a simple bulb come from. The answer of course, (duhhh!), is from the bike after switching the ignition on. I'll hunt up my little 12v test light and finish up.
I understand that point gap can affect timing which is why I set the gaps first. I used the midpoint setting of .014" which is about the same as the "Old Bloke's" first attempt of 35mm. So if I wind up at the extreme of the available adjustment, like he did, I'll bump the point gaps up to 0.016".
Thanks again for your reply!
ZT