The brass plug pushes on a spring which in turn pushes on the ball in the seat. It is the spring compression that regulates the RPM where resonance occurs.
The factory setting was made to limit RPM to prevent over-revving at WOT when at no load. The governor was not meant to be tampered with by the user. If the threaded plug is backed out, then the RPM at which it resonates (and floods the saw) is lowered. Over-tightening the plug will raise the RPM that causes resonance. Beyond a certain amount of over-tightening, the governor is effectively disabled, since the saw will max out by itself. Many older saws were at risk of coming apart when over-revved, that's why the carb governors were used.