The "tooth off" thing is often misunderstood when it comes to whether the timing can be set or not. There are 13 teeth on the distributor. 1 tooth = 28º of distributor body, or 56º of crankshaft rotation.
First, theoretically it does not matter "where" the shaft is indexed to the cam. It can be on any of the 13 positions. Theoretically you turn the body of the distributor, until the rotor lines up with #1 in the cap, and it will run. The important thing is the correlation between the shaft and the body. The 'firing' and the rotor-to-cap.
But here's why it's an issue. There are connectors on the body. They do not permit the body to be rotated at will. Sometimes, if it is a "tooth off", you just can't physically turn the body enough to get the timing correct. Or the body isn't where you want it to be when the timing IS set. In this case moving a tooth or more, will correct it.