my car is an 1994 JDM imported ST202 (SS2). In the rear its supposed to have "adjustable suspension", so i had a look and there is a "knob" at the bottom of the suspension arm which turns between 0-7. now what im confused over is what is this adjusting and does anyone have any idea as to what might the best setting be?

height adjust is exactly as it sounds...think Ride Height

raises and lowers car

Ride Adjustable i'm guessing is their way of saying adjustable dampeners...
so 0-7 would be a soft to hard or hard to soft setting that lets you control how rough the ride will be, and how stiff/quickly the suspension will react