That "540" mark is telling you what engine RPM will produce 540 RPM at the PTO. PTO-driven implements are usually designed to run at around 540 rpm, so when running a PTO-driven implement, you'd want to set it near to that RPM and keep it there. Some folks will run the RPMs a little lower to slow the implement down, and that's okay, as long as the implement still performs acceptably. For example, with a finish mower, you're going to want a certain minimum blade speed to get a decent cut.
You don't have to worry about running the engine at that speed. A tractor engine should be designed to run at PTO speed day in and day out for the life of the tractor. It's not like your car where if you ran it at the redline all the time, you'd burn out the engine. So don't worry about babying the tractor. It can take it. But if you're like me, sometimes you'd like a little more peace and quiet, so you turn the engine down some. That's okay, but look for signs of inadequate RPM, like the engine bogging down, lugging, or smoking.
I don't think you say whether you have an HST or a gear, but if you have an HST, it will respond better to higher RPMs than lower. In general, whenever I'm doing much other than driving unladen on flat ground, I am running at PTO speed, to give me maximum ground speed at a given gear. If you press the HST pedal down and the RPMs drop, the tractor slows down or stops, and you hear the wining that indicates the transmission is going into relief, that means you need to either: back off the pedal, increase RPMs, or shift to a lower gear. Or some combination of those three.