The link below is a better explanation than I could compose.
Basically, point gap ensures that they stay closed for the proper amount of time for the coil to build up the necessary zap for the spark. You're right, the spark occurs when the points open, which interrupts the currwent through the coil, causing the electromagnetic field that was building up to collapse and discharge.
Points set too closely allow the current to build for too long and are hard on coils. Points set too wide don't allow enough time for the coil to build enough energy for a good spark. Set them too wide and they won't even close to do their job. Mis-gauged points can also affect timing. If they open too early (points set too close), it can advance your timing and the opposite for opening too late.
The condensor is a capacitor and is there to protect the points from any backflow current from the coil.
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Today's Featured Article - Tractor Profile: Earthmaster - by Staff. This tractor, manufactured by the Earthmaster Farm Equipment company in Burbank, California was made for only two years. The Model C came out in 1948 and was followed by the "CN" (narrow-width model), "CNH (narrow-width high-crop model), "CH" (high-crop), "D" and the "DH" (high-crop) in 1949. The main difference between the models was tire size, tractor width and cultivating height. The "D" series were about 20 inches wider overall than the
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