In simple words, that's the maximum amount of system memory the graphics card may borrow when it runs out of its own.
Setting this to more than half of your total system memory doesn't make much sense, neither does keeping it too low.
All this doesn't matter much at all in real life, since whenever the graphics card can't fit a scene in its own memory, performance is going to suck no matter how much system memory it borrows - simply because of the huge speed difference from graphics card local memory to borrowed system memory accessed through AGP.
regards, Peter