So you have chosen 500 recent messages. Earlier ones if not deleted will be hidden but you can get to them in a given moment by scrolling down in the inbox. As to the other settings, this really depends on your particular preferences. For example, the organize by thread which you have checked ON is not appreciated by some people because the mail app will group together all messages with a given subject matter. It might be helpful when all mails in the thread belong to the same subject matter as is the intention but if you get a message with a subject like "Hello" from different senders and unrelated messages, it is hard to find them later when you have forgotten they are grouped. As I said this is really up to what you prefer. I happen to like it.
Increase Quote Level means that when you quote the sender's mail in your reply, the quote will be further indented to make it clear you are quoting the sender rather than the quote being confused with your reply. I have that ON too as I think it makes messages easier to read, but again, this is up to you.
Hope this helps