The items in the "Cache" group determine how much KB of main memory will be reserved for the HPFS cache of the respective file system. This corresponds to the /CACHE:xxx parameter in the HPFS.IFS command line.

According to IBM's documentation, the maximum cache size for HPFS drives is 2048 KB, which is not a whole lot.

You may request that OS/2 automatically determine the cache size. In most cases, this will then result in about 10% of the installed memory, but I don't recommend using this setting.

See "File-system caches" for an introduction to file-system caches in general.

The setting "Cache item threshold" determines (in KB) the maximum size of objects that will be saved in the caches. This corresponds to the /CRECL:xxx parameter in the HPFS.IFS command line. This setting is supposed to prevent large files which are usually only loaded once from clearing the whole cache. However, I think that the default value of 4 KB is way too low. You can safely specify 32 KB or even the maximum of 64 KB here.