Funnily enough, this age old problem has recently been discussed in this thread.

The reason you're having trouble getting your head round it (coming from road bikes) is that motorcycles with long travel suspension need, what seems a ridiculous amount of slack when the suspension is extended so as to accommodate the progressive tightening as the shock is compressed and the swingarm moves towards the horizontal, in line with the drive sprocket axis (at its tightest point).

50mm of slack is generally about right for most with the bike on a centre stand, or with no load on the suspension. The exact slack will vary slightly depending on where you shock preload is and how much shock travel you're using. If you have lowering links it'll be different too as the swingarm will tend to sit nearer the horizontal for the bulk of the time the bike's moving, so perhaps need to make double sure it's not on the tight side. The main thing you want to avoid is it being too tight when the swingarm is horizontal, either when laden or carrying a pillion, but even without, as when you accelerate hard the suspension compresses just as much, plus the stresses on the chain are at their greatest.

Everyone has their own way of doing it. You've just got to find yours!

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