HI,
The blue wire is the FIELD EXCITATION WIRE, this as you have discovered goes onto the terminl at the back of the alternator.
The wire is from the battery(ignition) warning light when ignition is turned on a 12 volt LIVE FEED goes through the bulb down this wire and to the alternator exciting the field windings to start producing current(volts) when engine is running.
Of course if your bulb blows you have no charging, but you can briefly touch 12 live onto terminal to start charge once engine is running.
With lights, heater, hrs on you should be looking at around 13.4-13.8 at 2000rpm.
tabetha