The numbers on the dial represent the height in inches the blades will cut at.
To set the deck at the height you want to mow at, you raise the mower to it's highest position (transport) then turn the dial in either direction until the number you want the cut to be aligns with the arrow (12 oclock position) then lower the mower and it will stop at the height you set the dial to.
If the mower was set up correctly the numbers will match up to the actual blade height. If it doesn't, the mower can be adjusted to match it.
Since I mow at 3", I set my mower up with the dial at the 3" position and it's pretty accurate at the other ranges too.
The "top" position on the dial is used to lock the mower in the transport position so you can use the 3ph without the mower going up & down with the 3ph.
The "bottom" position is used to lower the mower to it's very lowest position inorder to mount/dismount it.