Running the striker into the hammer (shortening the stroke) takes away momentum from the hammer, thus not opening the valve as much. Think of it same as using a carpenters hammer. Hold the hammer 1" from the nail and hit it. Now hold the hammer a foot from the nail and hit it. Or drop a baseball from 2" off the ground and then drop it from waist high.
James, you are correct. Threading the striker into the hammer allows the hammer to travel further before hitting the valve stem, thus it will deliver more momentum.
I don't know what gun you are tuning ------- So on my Prod I put in 4 and then extended the striker of the hammer to let out a little more air. Small changes make significant velocity change. Optimum seems to be in the range of 1.25 to 1.4 turns.