It's a combinination of bit flags. The lowest bit controls whether segment heap is on or off. The 2nd lowest bit bit controls some additional optimizations that go along with it, something about multithreading. A value of 3 (both flags set) gives you identical behavior to what specifying <heapType>SegmentHeap</heapType> in your application manifest does.

Using the application manifest approach is the right way to ship software that opts into segment heap. The registry thing is just a convenience for local testing.