When all is as it should be (shims under distributor drive are correct and hold down clamp is nice and flat), the link between the distributor and the crankshaft is solid. The thing is, the engagement between the distributor drive the original distributor errs on the loose side in order to avoid any binding between the two, and possible damage to the distributor drive or the (brass) distributor drive gear on the crank. (The spring between the two keeps a steady, light thrust load between distributor drive and distributor/CPSH drive.) The result is that, if all is just a little off, it can result in the distributor losing its mechanical connection to the distributor drive.
Over the years I have help folks stuck on the side of the road in their VW's with this distributor drive system. They were trying to figure out why their engine just stopped running, and it turned out to be the distributor had backed out of the hole and lost its mechanical link with the crankshaft. You would think this is an easy thing to diagnose but, especially when electronic fuel injection is involved, a simple issue like this can be easily overlooked.
The original VW clamp is often the culprit! The design of that clamp (which dates back to about 1946) is flawed, and unnecessarily complicated for the 'modern' distributors that came later. Ironically, the reason VW did it this way is because the distributors they used back in the ‘40’s and ‘50s was much larger in diameter and blocked access to the M8 nut that holds this clamp down. The smaller distributor that followed does not block access to the M8 nut, which renders the whole pinch bolt system unnecessary. Regardless, it is what it is…
What typically happens is that the M6 nut on the pinch bolt gets over-tightened causing the clamp to deform and no longer sit flat. That tends to lift the housing away from the block, which can pull it out of the distributor drive. The same thing would happen to distributors from time to time. New, aftermarket, VW-style clamps are available for cheap. But, my experience with aftermarket clamps - like many aftermarket things that try to do what VW did - is they are crap. The deforming/lifting issue is even worse.
Bottom line: If your engine just suddenly stops running for no apparent reason, check to see if the distributor is all the way down—it could save you lots of time, and maybe your vacation!