Just tighten it up till you can’t spin the big wheel thingy, then back off a little. You should be fine.
The actual clearance is a bit more than just learning the spec provided by the manufacturer.
In general, the protrusion of the knife and the gap clearance are linked together to produce a chip size that feeds well and doesn't bog down the engine. That's hopefully what the manufacturer's spec gives you.
Then you need to figure in how much slop you have developed in your chipper drum/disk bearings. If they are getting loose, then the drum/disk can wobble over and strike the bed knife hard enough to do bad things. I like to set my knives to the manufacturer's spec by getting enough sheets of paper to match the spec. Then I hand feed the stack of paper through the gap while hand turning the chipper. Do this for all knives on the drum, and all positions on each knife. While turning it through, you can see if your stack of paper is getting cut (too tight!) or if the knife isn't hitting it enough to drag on the paper a bit. THEN I take the paper out and see if I can pry or oscillate the drum by hand into a position that will cause the knives to strike the bed knife. If you can force the knives to clash by hand, anywhere on the rotation, you need a bigger gap!
So far, this method has always worked for me.
