Whatever you enter here will appear in the sidebar TOC. I personally hate this option, so I never tick this box. If the box is ticked it will fade the bottom of the chapter banners as seen in the second image. 'Fade Chapters Header' doesn't seem to have anything to do with 1 (idk why xD).
The Chapters Header is a some sort of banner at the start of the guide, it looks a bit like 1' (but not exactly). Some notes corresponding to the numbers in the images: Rather than explaining how to do this one thing I'll just go through all the things you can do.
