I'm trying to figure out how the bulb is wired that goes into this hole here;

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This is the warning light for the oil temp gauge;

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How does the warning light work on the oil temp gauge? Is it an internal connection to the needle? If so, do I just put power to a bulb and when the temp gauge reads high enough it ties a ground to that light and it lights up?

The bulb holder is for the dash light. You have it plugged in the the socket that should be empty(2nd Hole from left looking at the back in the picture). It should be vacant. 2nd hole is for Sportmatic tranmission waring light. Black/blue wire marked L in picture is for the guage lighting.