The setting is used to estimate the wheel speed and distance as reported by TR in completed workouts, if they are then pushed to apps like Strava.
A typical trainer would use 2096 or so for the 700 x 23/25 wheel size. But oddly, there is something different about how Elite runs theirs. You are supposed to multiply that value by some factor to get the “normal” info from their trainers. I know there is an issue, but for some reason, I can never remember or easily find that factor.
Hopefully a fellow Elite user can help with that info.