Degrees is pretty much exactly that. Imagine the crankshaft timing sprocket (assuming you've seen it lol) as it rotates. When the dot on the sprocket lines up with the dot on the block, that's 0 degrees BTDC. There are 360 degrees in a circle, right? so if a piston fires 20 degrees BTDC, the spark plug will ignite when the dot on the sprocket is still 20 degrees (or 1/18th of a circle) away from the dot on the block.
So yes, you are right; a higher spark advance means the spark occurs when the piston is farther away from the top of its stroke.
The danger, of course, is having the flame wave hit the top of the piston while it's still in its upstroke. That is bad, as it will severely hamper power production (at best) and crack your piston/explode your engine (at worst). This is called detonation, and it's real bad like. Detonation is usually preceded by knock (a small detonation), and is why the engine has a knock sensor. If it detects the beginnings of detonation, it will yank timing from the engine (make the spark occur when the piston is closer to TDC) until it no longer detects knocking. The EEC dedicates a test solely to the knock sensor during the KOER test for this reason (it's kind of an important sensor). You may have heard of this as the "goose test", and if you do it right, you will be able to hear the knocking the engine makes (the EEC advances timing to a point that is guaranteed to knock for the test).
This is also why running 89, or even 87 is not a problem in most SHOs; the knock sensor will automatically retard timing to adjust for the lower grade fuel. This does, however, result in less power as now the flame wave is now likely hitting the cylinder on its downstroke after TDC. It's also why Ford recommends premium; the engine can advance spark more with it.
Also, Adam: I'm bumping up the global spark because, honestly, I don't know any better. I'm not confident enough to go messing around with all the spark tables. I was not aware that the EEC didn't look at it during WOT, which would explain a few things. To be honest, I haven't made a single datalogging run yet, as it would involve hooking the laptop up inside the car and I haven't gotten the moxy up to do that yet.