Set the car down on the ground with zero preload (hardly snug spring retainers). The car will compress x amount from full droop, which depends on the spring rate and weight of the vehicle. Now assume: 1. We have 400lb/in springs, 2. We have a 1600lb car, 3. The car has a perfect 50/50 f/r and r/l weight distribution.
Now put 1" of preload on all 4 corners, and there will be zero compression when you drop the vehicle on the ground, the static and full droop heights will be the same in terms of hub to fender measurements.
So in this example assume in the first case with zero preload, you had 3" of compression between full droop and static. That would mean you could raise the static height of the car up to 3" (not that you would ever do this) because at that point there would be no more droop travel left.
Typically you adjust preload to change the bump/droop travel distribution, as you want roughly equal amounts of both. The KW/RCE's are not meant to have a huge range of adjustable height's, they are designed for the BP/BL chassis specifically, and those acceptable ride heights. But with KW/RCE's preload does adjust your ride height within a certain range.