Yes, "top of the knob turned away from you while in your mouth" is "open".
That's backwards. Fully clockwise (looking at the end of the knob, i.e., "closed" or "screwed in") is the hardest to start the flow, useful for entry and on the backup regulator. In normal operation, open it to make the start of breathing easier, but not to the point it free-flows while in your mouth. Over time as internal parts wear, you may need to adjust it a little in/more closed to stop a slight free-flow that might have developed (slight bubbling, really).
It controls only the starting effort. Once the flow starts, there is no difference.