You know I'm a neophyte when it comes to setting up a diffy, but I think Stephen is talking about the distance from an imaginary point (center line of the axle if I understand the concept) to the head of the pinion. If I understand the procedure correctly the measurement is taken with a straight edge across the bearing cap thingies, without the caps on them, to the head of the pinion. By knowing the correct distance the thickness of the washer under the head of the pinion can be determined, eliminating the need for trial and error in getting the pinion depth right.
Stephen, I looked in the FSM and there is no mention of CD, besides I *think* the CD is specific to the gears being set up.
Just my 2/100th of a $, someone edumacate me if I'm off base, Brian.