the spark at the point gap is caused by the 'back-emf' of the ignition coil.the system works like this:
1) points close , current flows through points energising the ignition coil via it's primary winding.
2) voltage builds across ignition coil, which creats a magnetic field.
3) points open ,current interrupted from coil primary, magnetic field starts to collapse.
4) magnetic field collapses quickly, inducing a high voltage in the secondary winding ( creating the spark which fires your engine ).
now , since the primary winding is still present ( although not directly in circuit since the points are open ) there is a large voltage induced into this too by the collapsing magnetic field. Left to it's own devices this would be sufficient to jump the points gap as they open and burn the contacts up.
To prevent this a condensor or capacitor is placed in circuit across the points. This is of a value chosen to limit the rate of rise of the voltage across the points (by soaking up the energy) so that it can't get high enough to damage the points. Too small a value and the points will still burn (can't soak up enough) , too high and the efficiency of the ignition coil is impaired.
The 'kettering' ignition system as it is called is actually one of the earliest and simplest forms of a DC switching power supply, the principles of which are running your PC as you read this....
The older I get, the better I was...