Pretty much how they're supposed to work, and how they do work in most cars. So that answers Paul's first question.
To answer your second question Paul: Yes, if you junk them, you do need to join the 2 loose wires formerly feeding the ballasts. But you may need to think a bit more before doing that.
Laverda wiring doesn't bypass the resistors during engine starting, so they're in the coil circuit all the time including when the battery voltage is depressed while cranking the starter motor.
I presume ignition coils of the day were all designed to run on lower than normal system voltage, assuming a ballast resistor shunting system would be employed. Running them continuously at full available voltage (up to 14V) could overheat the coils. That's why they were installed with resistors by the factory in the first place.
So, further to your question about getting rid of them. There are situations when junking them is recommended and others when it is not.
1. If you have updated coils designed to operate on 12-14V, they'll be OK without ballast resistors.
2. If you have the original coils but a modern electronic ignition upgrade (as if Paul would have such a thing

), the old coils will be OK without ballast resistors because electronic ignitions control the dwell time better than points.
3. If you have original coils with contact breaker points you might over-cook the coils without the resistors, so leave them in the circuit. But to improve starting, you can add the starting bypass that they were always meant to have. Just run a wire from the switched side of the starter relay to the positive side of the coils (between coil and resistor). That will shunt the full battery voltage to the coils for as long as you have your thumb on the starter button.