If using the stock sender location and the gauge indicates correctly, the indicated temperature will be about 15 degrees cooler than the temp at the thermostat. This is because coolant has to travel across 3 more combustion chambers before it reaches the thermostat housing.
Mechanical gauges could indicate even cooler temperatures if the sender wire (whatever it's called) is not insulated. In the winter, my gauge will indicate 140 or 150 but if I check the thermostat housing with the IR thermometer, it is over the thermostat rating.
The key with the gauge is simply to become familiar with it and learn what is normal so you know when there is a problem. It may not be accurate enough for precise temperature indication in all conditions but you can know when something is wrong in virtually any condition if you are familiar with it.
Another thing to remember is when thoroughly warmed up, an engine will not operate below the thermostat rating at the thermostat housing, so say you have a 180 degree thermostat and whatever device you use to measure the temp indicates 160, then there is some problem or flaw (as with the mechanical gauge) with the device you use to measure the temperature or you're not getting the reading from the right spot (as with the stock sender location).
Lawrenceville, GA