Standard 128 regulator is an aftermarket electronic regulator designed to plug into existing pre stock (1972 and older) electronic controlled ignition cars with no modifications.
A 16 gage conductor is large enough to connect chassis of spark controller (orange box) if equipped, voltage regulator, and alternator to battery. Alternator will be primarily grounded by its mounting brackets, adding the loop will take that last 1/100th of a volt drop away.
Keeping battery terminals clean is very important to reducing voltage drop.