Paul,
quite simple, it is a SPAN alarm.
For EGT the SPAN is really a waste of space. The only time any alarm is useful for span is when in the cruise and you get slight variations, this is why I m pushing Dynon to get a NORMALIZE mode.
Any large egt variation on a cylindr will be visibly noticeable, and most likely a slight feel change, mostly a plug that is partially or completely failed.
A CHT span however is somewhat useful. In the event of a preignition event, you will want to detect a runaway CHT, so you could set 30 degrees F or similar in for that. More important setting the colours properly would be my first call.
Set CHT to go Yellow from 380-400 or 410 if you really need it, and red after that. This gets your attention and if it is alarmed in the red even better. This way if you get a preignition event, those precious few seconds from beginning to end will allow you to save your engine and save yourself.
Last of all, www.advancedpilot.com
You really would benefit greatly from doing their course. Best investment you will ever make. Yes I am serious. Best Return on Investment, and maybe a life saver.
All the best!
DB