The more you turn the control to SMALL the more you'll attenuate the deeper bass output of the subwoofer. This can be useful to fine tune the subwoofer to the room influences. There is no "correct" setting. If you are running a good room correction system like an Anti-Mode or Audyssey, leave it set to large as the room correction will pull down any deep bass bumpiness. And you can always just experiment by "ear". Use your favorite music and see if *slowly* adjusting it towards the small position seems to tighten things up a little. Just leave it where everything sounds best with a wide variety of source material.
TomV