This setting controls the subwoofer’s upper-frequency cut-off. 

This can be set to match the low-frequency roll-off characteristics of your system’s speakers. For example: If your speakers play to approximately 80 Hz, you can set the subwoofer cut-off frequency to approximately 80 Hz. 

Bypass option allows you to bypass the subwoofer’s built-in cut-off control to let your preamp/processor’s or receivers internal bass management system provide the crossover function.

Modern receivers generally have this functionality built into them and it is best to let them control the crossover while leaving your setting to bypass (or it’s maximum setting if bypass is not an option)