A higher number means a smaller grid spacing, so use a low number to get them lined up.
No, the number is the size of the grid, the distance between two properly lined-up systems.
I agree that it's a bit tedious though. It works by just rounding down the coordinates to the next grid point, which makes it easy to misplace a system and have it collapse down to the same position as a previous system. Always place the system above and to the left of the grid position where you want it to go and the line-up button will put it in the right spot.