If the diff is too loose, it will melt down. If it's too tight, it affects the handling, as it won't have any differential action.
Here is the text from the manual, available at this website:
http://www.duratrax.com/pdf/dtxc0062-manual.pdf
The ball differential has been adjusted at the factory for proper “breakin”.
Do not tighten the differential before the truck has been properly
broken-in or you can damage the differential.
After running the truck for 2 or 3 tanks of fuel, the ball differential
will require readjustment. This is the “normal” break-in period for
the ball differential. You will hear a “squealing” sound when
accelerating from a stop and the truck will accelerate slower. This
indicates that the differential is properly broken-in and now
requires adjustment. Do not run the truck again until the differential
is properly readjusted as follows.
Adjusting the differential is quick and easy. Access the adjusting
screw by disconnecting the rear camber link (using pliers) at the
right rear wheel. Rotate the wheel and CV shaft out of the way.
While holding the left rear tire, tighten the adjusting screw by
inserting the included 3/32" L-wrench into the cap screw on the
right side of the ball differential. The screw should be tightened
until it is “just snug.” Caution: Do not over tighten the adjusting
screw or you will damage the differential. Next, loosen the screw
1/8 of a turn.
Reinstall the CV shaft back into the differential and reattach the
camber link. The ball differential may need occasional adjustment
to maintain performance.
Also, I will warn you. Make sure you rebuild it on occasion. Take it apart and use some silicone diff grease on the balls and plates. If it runs dry it will burn up and wear grooves in the plates. You can tell it's time to lube if you hold one tire and turn the other and it feels "gritty". It should be smooth.....