This week's book giveaway is in the OO, Patterns, UML and Refactoring forum. We're giving away four copies of Refactoring for Software Design Smells: Managing Technical Debt and have Girish Suryanarayana, Ganesh Samarthyam & Tushar Sharma on-line! See this thread for details.
Better to use code tags for your example to make it more readable. Also, you didn't tell what output you have got from it and what you have understood from that.
Yes, both your threads t1 and t2 will be using the same lock( lock object of StaticSync class ) when they call StaticSync.method(). However, the method() has no long running code which will clearly demonstrate that other thread is waiting for the lock when first thread is running.
So, my suggestion would be to make StaticSync.method() take lot of execution time.. move that for loop from StaticSyncTest to the method() and notice the behavior of the threads and their locking.