The "Z" was intended by the Army at Ft. Benning to be a "memory aid" for the Soldier to remember where to set the rear sight elevation for 25 meter zeroing.
They also wanted this added to the M16A2 rear sight, but I rejected the idea. Reason was is that I knew people would confuse the "Z" with where there sights should be set for an actual 300 meter zero, and from some of the questions/comments preceeding, you can see how easy it is to get this mixed up.
The second reason was that if a Soldier would actually remmeber what the Z was for, then he would probably remember the +1 click above 8/3 as his 25 meter zeroing point.
Thirdly, we had already made too many compromises with the Army over the improved M16A2 sights such as not changing the thread pitch on the square front sight post so its clicks would be an even minute instead of a fraction.
Also note that military battle sight zeros (BZO) may have no use or value for civilian type shooting. For example, the BZO for the 1903 Springfield Rifle was 525 yards because it was based on the trajectory of the round hitting a standing man size target with a simple "no adjustments required" sight setting.