From your question, I'll assume this is a new tank with a new heater. You want to put the heater in the tank, and let it acclimate to the water temperature for 15 minutes before you turn it on.
If the heater has already been on for a while, 30 minutes or more, and the water temperature is where you want it, turn the dial just until the light comes on [ where it will turn on just above 75 degrees]. The turn it back just until it goes off. That will have the temperature setting so it comes on right around the temperature your water is now [75].
When the temperature falls below 75, the light will come on, showing the heater is warming the water. As soon as it gets back to 75, the light will go off to keep the water from overheating. It will let the temperature go 1-2 degrees in either direction before coming on or switching off.
And yes, a thermometer will let you make sure the temperature is where you want it. Put the heater where there's good water flow so the warm water circulates around the tank, not just stay in 1 corner. And put the thermometer on the opposite side of the tank, this gives you a better idea of the water temperature in the tank.