When yuou look through the aperture, your eye tends to center itself at the point of strongest light - the center of the aperture. Then all you have to do is to place the tip of the front sight on the spot you want the bullet to hit, assuming you hgave zeroed the sights this way. Izero a peep by having the bullet strike 3" above the top of the front post or bead at 100 yards. This means when using a standard 100 yard rifle target, the bull perches on top of my post, giving what is known as "the pumpkin on the post" sight picture.
If you zero this way with a .30/'06 class cartridge, the bullet willbe at the very tip of the post at 200 yards and about 6" below that at 300......
Note this picture shows the aperture outline very distinctly. While this might be the case when using a small aperture target sight, when you are using a relatively large one like on the M1 rifle or a ghost ring, you should not pay any attention to the rear hole at all, just look through it - it should be just a blur! If you have a Lyman, Williams or Redfield peep, unscrew the removable aperture and just look through the big threaded hole.....