Retarding the timing puts more energy out the exhaust and less pushing down on the piston, Its more "waste" but it will push the turbine wheel harder with more drive pressure and make more boost, however its less % of the energy from combustion translating into the crankshaft spinning and turning the wheels. More advance shifts that percentage to more of the explosion pushing down on the piston and generally a higher volumetric efficiency. You have to find the sweet spot where the air flow of the engine and the fuel system is happiest together. Fuel system wear affects injection duration, which is how long the injector is injecting fuel after the first injection relative to the timing of the pump. So lets say youre at 8* with a stock na engine and new fuel system... Lets say with injection starting at 8* and with a new stock setup you are injecting fuel for 10* after the start of injection. Lets call that 10* of injection to be the baseline, so a 100% injection duration. Now lets say that fuel system gets 50k miles of wear, and you readjust the timing back to 8*, with the additional wear lest say youre at 75% of the original injection duration, so injection ends after 7.5* degrees after the start of injection. Because of this, even with the same volume of fuel, same timing and fuel system your engine is going to want a bit more base timing to cheat it back closer to the same timing setup it was stock, so on paper you would split the 2.5* loss in half and add 1.5* to get a base timing of 9.5* which would set the fuel system as close to its original setup as you could without changing your fueling. When you increase fueling you typically increase injection duration, but by how much depends on the fuel system's wear, so there's really no way to say which way timing needs to go from where it is now, you just gotta play with it either way and see what it likes.
For the sake of a (not really) simple explanation, lets say youre at 125% injection duration with your fuel adjustment and at 8* base timing, 25% of the injection duration is going out the exhaust in the form of thermal/kinetic energy. Lets say with that adjustment, your engine is at a 75% volumetric efficiency. Think of volumetric efficiency as just an efficiency rating for your engine. Power adders like turbos add volumetric efficiency by artificially increasing the atmospheric pressure in the form of boost (nitrous, water **** are a different story). So when tuning these engine you have to compromise between the volumetric efficiency of the engine and more energy used to increase the V.E by increasing turbo output. For example, you may lose 5% engine volumetric efficiency by retarding the timing 2* but gain 10% V.E by increasing the boost by 2lbs.