Really it's means nothing, from the factory it's likely where they had #1 set to be.
All the #1 on the cap is, if a stock distributor is being used, a guide so the advance device hanging on the side of the housing has room to swing, for adjusting.
But, backing up on things...damn, hope I don't write a book here...
If you don't understand how things work, makes it much harder to get done. First, on the 0 TDC mark on the balancer. Each time the 0 comes up, #1 piston comes to TDC.
TWICE! Once on compression stroke, once on exhaust stroke. You time the motor on compression stroke.
Wanna play? Pull the distributor cap...pull the distributor...and look inside the hole the distributor sits in. First two tappets driver's side are the ones for #1 cylinder. Turn the motor over (in correct rotation), until 0 is coming up. Watch those two tappets. If #1 is on compression stroke, timing at 0, both tappets will be down, before and after turning the motor near 0. If #1 is on EXHAUST stroke, as you turn the motor by 0 timing mark, one tappet goes down, the other starts to go up. It's called valve overlap.
Once you've got the timing on 0 TDC compression stroke, turn the motor reversed direction, backing it up a little, going past the timing you want. Then, in the correct direction, turn the motor until timing is (let's say) 10 degrees BEFORE TDC, and stop!
Now your ready to drop in the distributor. First, looking back in the hole, there's a drive gear, for both the distributor, and the oil pump. Also be a 'slot' center of the gear. Normally, that slot is in line with the cam. Easy to change if needed, by lifting the gear until it's clear of the gear on the cam, turn the lifted gear, and back down where you want it. Far end of the shaft that gear is on, also fits into the oil pump.
Points in the distributor? Either way, how you want the distributor is...so when it's down, you have 'swing' to set the timing, and clear the surrounding parts.
Knowing the direction of rotation of the distributor, and rotor, set it so the tip of the rotor is just coming in line with the #1 contact in the cap. Not 'in line' with it. You set the timing just when the points 'break', or just open. While the rotor 'sweeps' by the cap contact, it's firing that hole (lol, cylinder).
Should fire right off...but still need to finish by checking with a timing light, while the motor is running.