set the height so the tonearm is parallel to the record with the needle on the record.

the weight on the back is a counterweight. it adjusts the amount of balance between the front and back of the tonearm across the pivot point.

set it so the tonearm w/ needle attached balances (hangs in mid air when you let go of it), then move the black piece w/ the numbers (but NOT the weight itself) to zero - now you've "balanced" your tonearm. then, move the weight forward so the dial is at the the correct number (see your cartridge instructions for this number)