With an ATD in the timing chest surely the opening point of the contacts will always stay in the same position, you only change the relationship of points to crankshaft.
It's easiest to think about the effect of changing the points gap when at either low or high rpm where the ATD is at one limit or other of its travel so it isn't a factor. Imagine things are running fine and the engine, via the gear on the ATD, has rotated the magneto's armature until it is just about to open. That is, until the rubbing block on the points is just about to be pressed upwards by the cam.
Now, in this thought experiment, reach in and adjust the "fixed" point upwards by 0.002". Doing this will reduce the gap once the points are fully opened by the same 0.002". Since the "variable" point is supported by the "fixed" point until it is lifted by the cam, in doing this you also have moved the rubbing block 0.002" away from the cam, although nothing else (e.g. the ATD) has changed at all. Because in decreasing the gap you have pushed the rubbing block away from the cam everything is delayed (retarded) until the engine, via the gear on the ATD, rotates the armature just a bit further than before, until the rubbing block once again makes contact with the cam.
So, what this means is that whether or not you have an ATD,
decreasing the points gap
retards the ignition. However, especially with a magneto, there is a price to pay for adjusting the timing this way. A magneto works by having the points open to break the primary circuit at the same time the magnetic flux through the armature changes sign because of the shape of the armature and magnetic poles. That is, quite independent of the engine, a magneto generates its maximum output if the points open at a specific position of the armature. If after doing this you change the gap, you will decrease its output.
On a Lucas KVF the slope of the cam is 0.00334"/degree(engine). That is, changing the gap by ~0.003" changes the engine timing by a degree. However, making this change will reduce the secondary voltage at 500 rpm by ~7% so it means if you "adjust" your timing this way you will have to kick ~7% harder to start your Vincent.
It turns out Lucas (and BTH) did us a big favor with the notch that's on the armature shaft and the projection on the points plate. This alignment automatically ensures the points open at the position of maximum magnetic flux reversal
if the gap is set at the recommended value. Were it not for this alignment, timing a magneto would be a much more difficult process.
So, Step #1 is to set your magneto for maximum output by adjusting the points gap to the correct value. Step #2 is to set your magneto to fire at the correct position BTDC for a given engine by means of the gear you will lock to the shaft of the armature. I suggest you skip Step #3 -- messing with the gap to adjust for any mistake with Step #2 -- unless you are happy with a reduced output from your magneto.