There's 3 kinds of ignitions with different timing caracteristics; retarding, fixed and advancing.
Most 2-stroke peds have a fixed or a retarding ignition. Advancing ignitions are usually illegal because it increases the performance of your bike dramaticly.
You can best compare the ignition timing to pushing someone on a swing. If you push too late it'll hardly have any effect and if you push too early you're going to be in trouble.
-The fixed ignition:
The timing of the iginition is the same at all revs, this makes setting the timing fairly easy. If you set the timing too early the feul will be ignited before it is fully compressed. Your bike won't go faster than 5 Mph and ride really jerky. This'll destroy your piston in the long run, it's called "detonation". If the iginition is set too late you'll have less power.
-The retarding ignition:
A retarding ignition delays the spark at higher revs. So when you go faster the ignition timing will be set later, so you'll lose power and will not be able to go any faster. So the retarding-mechanisme is a revlimiter. The caractreristics of setting the timing are the same as those of the fixed ignition, except that the ignition cannot be too early at high revs.
-The advancing ignition:
An advancing ignition does the opposite of the retarding ignition. When you go faster the piston will go up and down much faster, so the feul has much less time to fully ignite. If the ignition would "advance" at higher revs, the spark will come earlier and the feul will have more time to fully ignite. Correctly setting the ignition timing on an advancing ignition is tricky. If you set it like a fixed ignition, the spark will come too early when the ignition is advanced, wich will cause "detonation", only this time at higher engine speeds. When setting the timing on an advancing ignition you must give the ignition room to be able to advance, so at low engine speeds the engine will be sluggish, but when the revs start to rise the power will really increase. This ignition also allows the engine to run at much higher revs, sometimes with the ignition advanced as much as 30 degrees. I have one of these ignitions myself, the engine does 11000 revs instead of the original 8500. If I adapt my cilinderhead it'll be able to go all the way up to 14000 rpm, but the clutch of my bike cannot handle such enginespeeds and will explode above 12000 rpm so I'll keep it at 11000.