russelw should write technical manuals. That's better than Gregory's etc for clarity and explanation.
Just to add, on 3.9 and any subsequent Ford with same block and inlet manifold, the bolt to release the distributor to allow it to be turned to adjust timing is hard to get at. Easiest way I've found is to use extension bars on a socket with a universal joint wound with a spring between the socket and the extension bar. The spring around the outside of the uni joint stops it flopping around, so you can locate it on the bolt, but allows it to flex when you're rotating the bolt as it's on an angle. The socket is fed between the inlet tubes on ?No2 and No3 (or maybe 1 & 2 - been a while since I've done it) cyls. Near impossible to get at it with a spanner, certainly from above.
Also, advancing timing was a traditional way of getting a bit more go out of non-ECU cars, but I've experimented with my 3.9mpi up to about 6 degree advanced and, if anything, it goes worse. I lost about half a second or more on 0-100. Too much advance can also do damage as it's causing ignition when the piston is still pushing it's way up and peaks before it's completed the journey, whereas recommended ignition peaks so that it's at optimum point to push it down on downward leg. Leave it at manufacturer's recommended timing.
Make sure you use a timing light that's OK for electronic ignitions.
Inductive pick up timing lights (where a clip goes on the plug wire rather than having to remove it) are easier to use.
If the distributor doesn't have a vacuum advance i.e. it's controlled by computer, there's no need to disconnect vacuum lines. Vacuum or computer controlled advance advances the spark to fire earlier as rpm rises.