Aero, the reason you are getting a performance boost is due to several factors.

First, you are spinning a larger and draggier propellor, that makes top rpm at a much slower speed than a 2-blade. In most cases, given the exact same engine, the engine will actually make better "power" at a certain, "Lower than peak" rpm if the timing is retarded slightly. This is due to the burn speed of the mixture in the combustion chamber, and how much average pressure is created over the burn/power cycles time period. The technical term for this is BMEP. . Brake Mean Effective Pressure. . or the AVERAGE of the pressure inside the cylinder as it first fires off and then the piston descends.

If the piston is moving slower, due to slower rpm, having the BMEP "spike" later is actually advantageous to increased overall "torque" at a specific rpm. For instance, if you are running 6500 rpm, you might want the BMEP to spike at about 4-5 degrees ATDC, but turning slower rpm, like about 5800 where you are turning it, youwant the BMEP to spike a little later (in theory) at (for argumetns sake) 8-10 degrees ATDC. Of course, these are just numbers to show a reference.

The reason for this is several fold. . first off, if you maintain "advanced' timing with slower rpm, the BMEP will spike closer to TDC, which is undesirable, since the pressure will degrade more quickly as the piston descends. It can also lead to pre-ignition or unstable burn from the mixture because the pressure builds too fast and the mixture will spontaneously combust (pre-ignite) instead of burning smoothly. By retarding the timing slightly at lower rpm, you move the BMEP spike farther back in the stroke of the piston, keep the pressure at a higher average level throughout the pistons descent, help remove the possibility of pre-ignition since the BMEP is spiking later, and gain an overall TOTAL BMEP for the burn/power stroke of the engine. If you gain 1% total BMEP increase while the piston descends, you gain 1% greater useable power during that power stroke. . and VOILA. . more useable power. This will help, usually, in the mid-range of an engine, since the timing sensors on the DA stop "advancing" the timing around 4000 rpm or so, and this is the critical area where BMEP pressures can soar due to over-advancing the timing at the same time you are stuffing the cylinder as full as possible, which tends to cause an unstable, out of control, mixture burn.

Conversely, for a higher rpm or lighter weight propeller, such as a 2-blade, you would want to advance the timing to take advantage of the shorter burn cycle as the engine is turning up easier, and transitions through this rough area more quickly, with less tendency to be held back and start running into unstable mixture burn conditions.

As for why the idle is smoother. . the same principles apply, and when spinning the heavier 3-bladed prop, you need a smoother power delivery with less static timing, to help smooth it out. Retarding timing moves the BMEP spike back a good distance during closed throttle/idling conditions, which makes the engine "Hit" softer and with a smoother power delivery. I'm sure if you advanced the timing fully at idle, it would become a bit rougher, noticeably so.

Hope this helps answer your question.