Best I can see is that the rear "shock" is just a spring with no damper. Turning the bottom washer simply adds or removes preload to the spring. The spring rate (force/distance) is probably more or less a constant for the "shock". I've no ideas what the real spring rate, but assume the spring rate is 100 lbs / in. Now if you go from the washer just being lose to compressing the spring 1/4", you've added 25 lbs of preload to the spring. Any force you now apply to the spring that is less than 25 lbs is not going to cause any additional displacement of the "shock". I backed mine all the way off and then added preload until I was happy with the way it rode.
chuck