Some people say that 1 means boot optimization only, other people say it means apps optimization only. And there are even people that say that it doesn't make any difference at all to change it from 3 to 1.
That's only for Vista. That key has no effect on Windows 7, it is ignored and provided for backwards compatibility. 7 will always cache both boot+user binaries as it sees fit. There's a big MSDN blog article about Windows 7's Superfetch they mention it there.
Unfortunately, Microsoft has only documented the "EnablePrefetcher" parameter, and only for Windows XP.
The EnablePrefetcher key is only in XP because in Vista the Prefetch Driver was replaced with the Superfetch service. Again, only there for backwards compatibility. But from memory, Vista will actually change this reg value depending on Superfetch service state - so that older pre-Vista software can still test if 'Prefetching' is enabled or disabled - when it's actually checking Superfetch status.
P.S. That first one is a BitAND - 1 is probably "cache boot", 2 would be "cache user apps" so 2+1 = 3 = do both. 0 is do none.