This text is nonsense and/or outdated. The setting "Small Icons" enables the buttonbar to display the correctly dimensioned icon in an icon resource automatically. ***Small icons: If checked, the icons are shown in 16x16 size, otherwise they are resized to the given size.
Also the size field beneath should be GRAYED OUT when this setting is deactivated!
By the way, what's the sense of this setting? Why would anyone disable it and prefer to see ugly icons?
*** Edited later, to be more precise:
Small icon size=32 chooses correct 32x32 icon, as long as Button Size >= 20, which is (16+24)/2
Small icon size=24 chooses correct 24x24 icon, as long as Button Size >= 12, which is (8+16)/2
This means that TC only chooses the forced "small icon size" as long as the difference to the chosen button size isn't too extreme, otherwise TC switches to the next lowersized icon.