There is no B terminal on the generator so hope you meant G which is a short screw or stud threaded directly into the generator body. If that is the case that ground is not really for carrying much current -- other than maybe a tiny bit in the field coil and headlight circuits -- so should not connect to the battery. All the heavy current out of the generator is carried by the generator body, mounting bracket and block metals to the positive battery cable. The small gauge ground is just two pieces of wire with a junction at the headlight terminal strip mounting screw and is there to provide a solid reference for the regulator so the regulator can know exactly what voltage the generator is providing. Without the wire the regulator would need to sense the generator output voltage by going round about thru various pieces of iron and sheet metal with rust, grease, and possibly corroded joints providing extra resistance. The added resistance could give a false return causing the regulator to call for more voltage than is needed or desired.
The B terminal on the regulator is straight battery voltage so would actually be the negative post of the battery. Had you hooked the ground up there it would have provided a very nice spark and probably melted wire.. On some regulators there is an actual ground terminal but on others the ground wire just attaches to the case via one of the mounting screws.