Cylinder 1 TDC compression stroke is used for reference so you can install the new sync "in-time" with the engine. Think of the sync as having two main parts - the body and the part that spins inside of the body. Both of these parts need to be installed in the exact same position as they were when removed. The tool keeps the two parts of the sync "in-time" with each other, firing on the #1 TDC compression stroke, as you drop the sync in the engine. Cylinder #1 needs to be TDC compression stroke to match what the sync is doing. I'm not sure if this helped or caused more confusion...
But anyway, the simple way I found to do it is: Remove coil packs and anything else in the way. Remove the two screws holding the sensor to the sync and remove the sensor, but leave the sync just where it is. You can look at the tool and see how it has to fit into the sync. Use an allen wrench in the power steering pump pulley to rotate the engine until the tool fits into the sync. (Without the tool installed anywhere, you can use the starter to "bump" the engine around if it needs to move far, just be sure the engine won't fire. Then dial it in using the tool and allen wrench on the power steering pump pulley.) The engine is now where it needs to be. Be sure to look at the timing mark on the harmonic balancer and set it perfectly on 0* if it isn't already. Remove the bolt/clamp that holds the sync and pull the sync from the engine. Be sure your new sync is well oiled. Install the tool in the new sync and drop it in the engine with the arrow on the tool pointing toward the front of the vehicle. Install the bolt/clamp and so on...
Apparently some syncs become physically damaged when they break, making the method I descibed unusable.
It's been a while since I did mine, and I'm going by memory on the above information, so hopefully someone will correct me if I've made any errors.