Less retarded = more advanced.
Regarding spark ignition engines:
Pre-ignition = uncontrolled combustion beginning BEFORE the spark plug fires. This would be due to one or more of the following, insufficient octane for the pressure developed in the combustion chamber, overheating or hot spots in the combustion chamber.
Pre-ignition can and will destroy engine parts in short order especially if it occurs at WOT.
Detonation (AKA spark knock) this occurs AFTER the spark plug has fired, and is caused by the rising pressure and heat from normal combustion and its flame front setting off the remaining fuel mixture in the combustion chamber.
When this occurs there are two separate areas of combustion resulting in two colliding flame fronts in the combustion chamber. This tends to cause all of the mixture to go off at once... therefore detonation and the sounds that are produced from the event.
While not remotely as destructive as pre-ignition, detonation will have more or less of a "hammering" effect on engine parts which is not beneficial to longevity.
Ignition timing will usually not have any effect on pre-ignition once it sets in. Only backing off the throttle or cutting the engine altogether will save an engine that is in pre-ignition.
This is usually a condition that only occurs in a grossly mis tuned engine running a fuel with insufficent octane, or a badly overheated situation.
Detonation ( AKA spark knock) as bad as the title sounds,
is not as bad for an engine as Pre-ignition.
Interestingly uncontrolled, prolonged spark knock can lead to pre-ignition which can then do great damage. Brief spark knocking events (a few seconds) do no damage unless severe knocking is occurring.
Spark knock can be reduced or eliminated by retarding the ignition timing among other things. Retarding ignition timing generally reduces an engines efficiency. Most engines with knock sensors will use the maximum timing advance allowed by the fuel's octane before knock sets in up to the max allowed by the pre-programmed ECU map.
There is a max spec for the advance programmed into the engine's computer... if the engine's computer NEVER has to retard timing with 87 then higher octane will generally not be beneficial.
And the inverse is also generally true... if the knock sensor signals the engine's computer to retard timing some efficiency will be lost, especially at WOT.
Increased octane will help this condition and generally provide increased efficiency and performance.
If premium gives better performance in a knock sensor equipped car this usually means that some spark knock was being detected by the knock sensor.
Colliding flame fronts AFTER the spark thats what detonation (AKA spark knock) is about.
Pre-ignition is totally uncontrolled combustion beginning BEFORE the spark, this might as well be a small amount of dynamite going off in the engine. The results sometimes look like it.
Rickey