1 = use this all the time as it gets set automatically anyway.
2 = Timestamp of account. The element will cache until the next time the account is edited. This includes just about any change to your store from within the user interface. If you make changes to your store several times a day, you shouldn't use this value as the cache will need to get generated more frequently which could end up negatively effecting page load time.
4 = Unique per page or product. This should be set for any element that is unique per page and the template is used on more than 1 page (like on prodlist elements on a category layout).
8 = Use CACHEZONE parameters to determine caching. (NOT USED AT THIS TIME - 20100210)
16 = Cache uniquely to domain (use when TOXML file is shared across stores - more for themes/wrappers than page layouts as the content of the page itself is likely the same across stores).
256 = use query string (uri parameters). Use this on PRODLIST/SPECL elements where user sorting OR mutlipage lists are in use.
512 = Cache for today. Will update at midnight.
1024 = cache on secure pages. DO NOT set this unless you have a specific reason. Elements with images referenced may get referenced from a non-secure location and cause SSL errors on secure pages