Basically what I believe the Steering torque filter does is average out the last Nth frames of feedback, if its set to 1 it will average out the last frame, if its set to 32 it will average out the last 32 frames. But thinking that smoothing the last 32 frames is good, does not work because, it has to recalculate all that info which in turn causes latency. It's a complicated thing to understand and those figures probably don't equal what is exactly happening, but I think as an average idea, that is probably the best way to explain it.
When I tested it, I started with 12 and it felt a bit spongy, backed it off to 8 and it still felt spongy, not much difference between 12 and 8 to me though. Put it down to 1 and it was quite rattly. Put it up to 4 and it felt quite perfect. Backed it off to 3 and it was very rattly again. Tried 5 and too spongy. So for me, 4 seems to suit best.