you sure can, if your engine is running retarded to what it can handle then you will loose out on power and economy.
effectively what you are doing when you advance it is to ignite the air/fuel mixture sooner in the cycle which means it has a head start and so it starts burning as the piston is still coming up, what this means is that theres a better burn and hense more amount of energy to push the piston down with, hense better power and as a result of a better burn of the air/fuel you get better economy.
better bang for your buck so to speak
the other thing to remember is that if you go too far with advance you will eventually get pinging which can be bad or worse for long periods of time.
the limit for each engine will depend on its compression ratio and the octane rating of the fuel you are using.
for example, my blue 202 has 9.4 to 1 compression ratio, on 95 octane fuel (premium unleaded) it seems happy on +4 degrees advance, however if i put 98 octane fuel in it i am able to advance it to about +8-9 degrees, this gives a noticable increase in power and probably better economy, however you have to weigh up the price of fuel hense why i set it to +4 as the missus refuses to put 98 in it (i don't blame her)
advancing/retarding the timing will also change the idle rpm, so if you adjust it enough you may need to change the idle stop to lower/increase idle speed as required.