This is not complicated. Look at my simpler annotated drawing and forget about that confusing third option. You must connect the source (variac output) to pins 1 and 2 in order to supply power to operate the meter circuit. The voltage reading on the meter is also derived from pins 1 and 2. The current reading is sensed via pins 4 and 6. The top circuit puts a .5Ω resistor in series with the load and the voltage drop across this resistor represents the current flowing through the load. (Same principle as putting a 1Ω resistor on the cathode of a power tube.)
Please note. You must use wire size that is capable of handling the load current to make connections to pins 4 and 6.The second circuit uses a current sensing transformer (doughnut) to couple a small voltage to pins 4 and 6. This voltage represents the current passing through the doughnut. You simply pass the load wire through the doughnut hole so the actual load current never connects to the small delicate meter. This means you can use very small wires to connect the meter.
I highly recommend using the CT method.If you are willing to spend $16 you can get a
PZEM-061 meter from Amazon. It uses a CT and a simple one wire mod will allow the meter to work over the full voltage range of your variac. Look at pages 5 and 6 of this
scrapbook pdf to see the simple mod.
PS... Here's a forum discussion about
adding a meter to a variac.