If your month was say Jan, could you use your points that became available in Jan 09 to book 11 months ahead in say Nov 09 (i.e. Oct 10 booking)?
First of all there is no January UY but if there were, no your Jan '09 points are not valid for a stay in Oct 2010 unless you bank them into your 2010 UY.
Here's another way to look at Use Year. If you have a February UY:
Your Feb 2009 points are valid for stays from 2/1/2009 to 1/31/2010
Your Feb 2010 points are valid for stays from 2/1/2010 to 1/31/2011
Your Feb 2011 points are valid for stays from 2/1/2011 to 1/31/2012
and so on until the last full year of your contract.
If you want to make a reservation for Oct 2010, you can call MS in Nov 2009 to book your home resort with home resort points. Your Feb 2010 points are valid for that stay since Oct 2010 falls between 2/1/2010 and 1/31/2011. You could also use Feb 2009 points that you had banked into your Feb 2010 UY. If you need even more points, you could borrow points from your Feb 2011 UY into your Feb 2010 UY and use them to book the Oct 2010 stay.
Your points don't drop into your account on the first day of your UY, they are already there. But each set of points has a set of dates associated with them that determine when those points can be used for accommodations.
Sorry if this is a silly question but struggling to get me head round it and can't understand why the advice is to get a month that you are unlikely to travel in.
I think you have misunderstood. The usual advice is to get a UY that is right before your normal travel dates. If you should have to cancel a trip (and do so at least 31 days in advance) you would still be in your banking window (first 8 months of your UY). If the points were banked or borrowed points and therefore stay in the current UY, you would still have many months to use the points for something else.
For example, if you like to go to WDW in October, then an Oct UY would work well. A Dec UY would be inconvenient because a last minute cancellation of an October trip would give you only a couple of months to use the points before they expired on Nov 30th.