Well... as Wayne pointed out, two successive statements in the instructions contradict each other. That and the poor labeling on the sub make it almost impossible to determine the correct setting, other than trying what Wayne suggested.
What I suspect is the labeling on the sub is wrong...
You're right. That's why I said the wording is counterintuitive. To be honest, I'm still not sure what the correct setting is either.
The solution I highlighted really is the best way to find out.
The wording for the LFE input on that sub is a little counterintuitive. In any case, you want to set it to "Active", since the receiver will do the crossover. Then there should be something in the speaker setup of the receiver where you set the sub to "Yes" or "On", all the speakers to "Small"...