Basically, it determines when the load changes from the helper spring to the primary (lower) spring in a dual rate system. Shock Therapy has many videos on youtube with How TO adjust on machine and shock specific. Check that out for setup and adjustments.
Fox has a formula on their website. More soft and more side to side sway comes from it being up more, less as it gets lower. But of course you loose the "plush" of the dual rate once you crossover. I would consider 1.5" to be a handling performance oriented setting, 3" to be a comfort setting. You pick any area between them.
all of these types of settings are just that... "recommendations".
ultimately you will have to tune to your liking,
and even when the terrain changes, you may need to adjust again.
settings like these are just too subjective.