Ok, taking this measurement. You will hear several variations on which tool to use. People use feeler gauges, clay, torque plates, expensive German measuring tools or a dial gauge set-up. Using a dial gauge works best for me. I take two measurements.
(1) Thanks to Kevin of KWS, Set your dial indicator up properly. Take a measurement rocking the piston as far forward towards the front of the motor. Write the measurement down. Rock the piston all the way towards the back of the motor and take a measurement. So if forward was .002 and backwards was .007, add the two = .009 and divide by two: .008 would be your depth in the hole.
(2) Check your work here. Try to center the piston in the hole. Heck use the dial indicator and center it properly. Afterall, everything is being put on this measurement. Set your dial indicator up so you can read the depth of the center of the piston. Write, that measurement down.
Now which measurement pulls more weight. As Kevin explained it. The piston under major load or possible detonation forces can rock forward and back so...this measurement is more critical...keep this in mind when considering piston to valve clearances.