Hi Bob,
Think of the dot sight like an aperture sight. The pellet will hit in the middle of the red fireball
For 50 yard shooting my POA was a handgun bullseye target with a black section that is around 4" in diameter. I place the red dot in the center of the black circle and try to keep an even amount of black showing around the perimeter. The same principle is used for target aperture sights where the rear aperture circles the front and the front aperture circles the bullseye target.
The red dot also works great for tin cans. Just center the dot on the can. Once again, your pistol is set up so the pellet falls on the center of the red dot. For longer distances, you hold over and keep windage the same.
A small dot size is preferable for smaller targets or the longer distance shooting. The Millet SP-1 has a 3moa dot which, in theory, should be less than 2" at 50 yards. The Leupold LG-1 dot is only 2moa. I think one of the Bushnell dot sights has a small dot option too. Hawke has some 4moa models. I think the red dot sight on my HW40 has a 4moa dot size.
I once tried a 2X pistol scope but didn't like my wobble magnified when offhand shooting. The scope also adds more weight than the red dot. The FOV is also quite small with pistol scopes. The red dot sight just seemed more natural to me but some shooters may prefer magnification or plain old irons sights. Lots of variety. Lots of fun.
Cheers,
Todd