Indexing the spark plug

The goal is once you have the spark plug tightened down you want the electrode pointing at the exhaust valve or the intake or somewhere in between like in the picture.  You do not want the back of the electrode strap blocking the spark from the incoming air/fuel charge. Usually once you tighten the spark plug, the electrode does not end up in a desirable position which is where indexing washers come in handy.  
Each one of these indexing washers you add will adjust the position of the electrode by 1/4 turn.  You just keep adding the washers until you reach the desired position.  The fewer washers you use the better.
It's definitely easier to do this with the cylinder head off the engine.  If you want to index the spark plug with the cylinder head on the engine, start by drawing a line on the spark plug indicating which direction the electrode is pointing.
Now there's a little guess work involved however you can see here we have a really good idea our electrode is pointed toward the exhaust valve.  We're happy as long as the electrode is not pointing away from the valves which means the back of the strap will be in between the spark and income air/fuel mixture.  Experts have their opinions so take this information and use your best judgement based on your research.