This quote from a list of old wives' tales in the Briggs FAQ might help:
"An armature air gap that is too wide will prevent spark. Not true. Well, sort of not true. Briggs & Stratton air gaps cannot be made too wide to prevent spark providing the coil is healthy and the engine is spun over fast enough. A wide air gap, say .030" will ever so slightly retard the ignition timing as the magnetic field takes longer to build within the coil windings."
As I understand it, you may get a spark at a lower cranking speed with a relatively small gap, and the larger the gap the later the ignition timing, but it just isn't a very sensitive adjustment within reason. For the GXV120, Honda specifies a gap of 0.4mm plus or minus 0.2mm.
One reason to avoid ultra-small gaps is that dirt sticking to the outside of the flywheel will cause abrasive wear to the ignition module.
