Hello, Paul,

A lead from that side terminal goes to the "input" lead on the coil.

When the ignition is turned on, and then the starter foot-pedal is pressed, that lead is "hot" (full 12v), giving full 12v to the coil.

When, the foot-pedal is released (and the ignition switch is still on), the hot-lead from the ignition goes through a ballast resistor and then to the coil. The ballast resistor reduces the voltage to the coil (to approximately 8-9 volts). This lower "driving/operating" voltage does not burn the points. If 12v is always "fed" through the points, the points would "burn out".

Do not ask why (it is a historical/electrical oddity - on all early 12v GM vehicles).

A "hotter spark" for starting and a "lower/cooler spark" for driving.

Tim
1954Advance-Design.com
1954 3106 Carryall Suburban
1954 3104 5-window pickup w/Hydra-Matic
The 216 and early 235 engines are not "splash oilers" -- this is a splash oiler.