I advance mine, but with that being said each motor likes a diff timing set up. On the dyno I picked up 7hp advancing the timing all the way, but in the dunes / track it didn't like it and I burnt a piston. My motor now likes about 1/2 way to wide open advanced from the stock location
We see this happen frequently when testing methods are not closely simulating/generating real world internal engine and pipe temperatures.
The time the engine is under full throttle determines the surface temperature of the piston crown, combustion chamber, spark plug electrodes, and the temperature of the gases inside the exhaust system.
Depending upon the power the engine is developing, the time the engine is under full load usually takes about 1 to 4 seconds if the gearing is not drastically changed when testing ATVs on dynos that most shops have nowadays. Engines like the timing advanced when the engine's internal surfaces mentioned above are not up to full operating temperature. These short dyno runs typically simulate internal engine surface temperatures seen in engines used for 300 ft.drags and not what most recreational or long track engines experience.
At the beginning of a dyno run with the coolant temperature at 150 to 200 deg F the piston crown will typically be 200 to 250 deg F. At the end of a 4 second dyno run, the piston crown surface temperature will rise to 300 to 350 deg F.
In the dunes at the bottom of the hill, the piston crown will start off at 250 deg F or so when the coolant temperature is 150 to 200 deg. After 10 to 15 seconds of full throttle when approaching the top of a long hill, the piston crown temperature will often exceed 425 deg. F on a properly jetted engine.
The engine will make more power retarding the timing if your exhaust system is not matched up for your porting and head design when the pipe is a little to long . An engine will make more power advancing the timing if the pipe is too short.
It is imperative that a person tuning two stroke engines has a good understanding of the above principles, otherwise the dyno tuning will not simulate real world conditions with engine failure often resulting.