OK, the piston goes up and down during it's travel motion through the piston sleeve.

When it hits the top of the sleeve, compressing the air fuel mixture it explodes, pushing the piston down through it's bottom stroke.

The piston sleeve in your engine is tapered slightly at the top. This is how compression is achieved, due to the fact these engines don't have piston rings.

As your engine heats up, the piston sleeve expands from heat. As it cools down, it will shrink down again. If you don't set your piston at BDC, you'll screw the piston sleeve up because it can't shrink back down because the piston is in the way. You end up loosing compression and power. You'll also possibly end up with a stuck piston. Not good Yano.

To find out where BDC is, take the glow plug out. Now take a thin (clean) plastic straw and put it down the hole. Now turn the flywheel, you'll see the straw move up and down. As it goes down and starts to come back again, you'll see where BDC is. Take a sharpie or something like that and make a mark on the side of the fly wheel and make an adjoing mark on the chasis. Now all you have to do is line up the marks, and you'll know you're at BDC. Some people put a more permanent notch or scratch instead of a pen mark.

Good luck.