What does the temp gauge represent?

I have ordered a new temperature gauge that shows actual numbers on it, but I have not gotten it yet. I am curious what the gauge that's stock in my 1968 Dodge Dart is supposed to represent (like where is 100* or 200* for example?)

Basically, I am trying to figure out my heating/cooling situation.

I made this really cute diagram to help explain.

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When I bought the car, it consistantly ran at #1 and stayed there during 65mph operation and even in town. It never went up, and if it did, it didn't ever go as high as #2.

I noticed the radiator was low as some of the coolant had recently been puked (on accident by my own doing seeing what the vent did). I added about 1 quart of fluid to it, and then it ran in the "C" range a lot longer than it used to, but at 65mph, the gauge is almost consistantly at #2. When I push the car, like to pass someone, or if I'm running it for extended periods (more than 20 minutes) it gets to #3, and if I idle for a bit, it quickly drops to somewhere between 1 and 2.

I need to know what this gauge was supposed to represent? I'm thinking maybe the thermostat was stuck open somehow and now is malfunctioning? I know it's easy to replace them, but I'd like to know what temps it is hitting before cooling, etc. And I'm still a week away from receiving my new gauge and still drive the car everyday. Hopefully someone has some insight.