How to measure backlash with a dial indicator?
Attach the magnetic base somewhere so the dial indicator can sit on a ring gear tooth. Hold the pinion so it doesn’t move and gently move the ring gear back and forth just enough to measure the backlash. If you move the pinion by moving the ring gear, you’re not measuring backlash. On a GM differential, backlash is adjusted by changing the shim thicknesses but the bearings also need preload so a case spreader is normally used to get the shims in and out.