maybe dumb question is better. Why does increasing timing speed up the motor. Is it because there is an optimum degree that best burns the mixture and advancing at idle gets you closer to that? If so then why does retarding the motor usually get you better gas mileage. I have too much time on my hands and I'm thinking about motors.....

You're fairly close on advancing the timing, in simple terms if you don't increase the amount of air and fuel going into the carb and by advancing the timing the engines RPM increases, I think you can deduct that the engine became more efficent. Being more efficent is the key to both performance and fuel economy. With that said you can see where the second part of what you said is not correct. Retarding the advance doesn't make for better gas mileage...

The thing is our car's engines don't just sit and idle, they operate at varing speeds with varing loads (going up hill or mashing the gas when taking off as opposed to cruizing along at 60 on a flat highway or easing into it from the stop light) Distributors have a curve built into them that increases as the rpms increase. There is also vacuum activated advance that adds advance when the vacuum go up and goes away when you go WOT. Both of these are set to cover the bases of all street use and intended to give the best performance and economy possible. With polution controls advance can be used to control some exhaust output as well but this typically gets in the way of both fuel economy and performance...