The first setting is the amount of time you want each zone to water your lawn. Some areas of your yard may call for more water, some may call for less time on the timer. In the case of a slope where the water runs off more easily, you may want to increase the watering duration and/or frequency. Alternately, where you have a more shady area, you may want your sprinkler heads to irrigate less because there is less evaporation in shady lawn areas. Drip zones on the other hand may need to have more time allotted to that zone depending upon the gallons of water per minute (gpm) that each drip emitter is putting out.
Another important setting is the time at which the first zone in your system comes on. In most cases, you want that first watering of the day to begin just before the crack of dawn. This allows the water to soak into the turf a while before evaporation might occur. One thing to avoid is irrigating your yard too late in the evening. This can encourage root rot, fungus, and oxygen starvation in the root system. In hot summer days or if germinating new grass seed, you may want to consider having your system turn on more than once a day...perhaps one time around 5am, and another time around 2pm.
Thirdly, you want to set the days that the system is to water. Consider avoiding peak water usage times like weekends, consider when you would like your lawn to look its best and when you don't mind it looking a bit dry (like the days you have to work). Consider the general rule of thumb: water as infrequently as possible, but when you do water let it run for a long time as to get down to the deepest roots. Some cities regulate when you can water...this should also be a consideration of course (in Columbia, S.C. there are no water usage restrictions).
When considering how to set your sprinkler system control panel, consider that as a general rule, you want the dirt in the area that you are watering to be just slightly damp to the touch. Your goal is to keep the plants watered at the right amount, which depends greatly on the layout of the irrigation installation, light or shade, water pressure and volume, and types of sprinkler heads.