the points are breaking the circuit, causing an inductance in a small generator type magnetic field (permanent magnets passing a coil). the battery / external coil is doing the same thing, just being a guaranteed source. the points arcing inside the combustion chamber causes ignition. now, the condensor on more modern battery ignition systems is in place solely to eliminate the very spark that your engine is relying on to run. the condensor's job is to protect the points from arcing and getting black and pitted. (well, it helped, anyway)
yes, those are two current sources for the parts you might need.