Looks like they control the day of the week on which merchant inventories respawn. Not sure if 0 and 3 refers to Sunday and Wednesday or Monday and Thursday, or something else even.
I think that they control how many days until a re-spawn occurs. I'm not sure about the day1 = 0 part, but I'd bet the Day2 = 3 means it takes 3 days for the merchants to re-spawn their wares, which is what it really takes in the game. Perhaps day1 =0 is used by merchants who's wares never re-spawn.
I kinda figured as much. So does that mean a cell respawn of 120 hours operates differently then the merchant respawn? So I'm using MMM with increased increased spawns at 120 hour cell respawn. Lots of combat and lots of used ammo. I was just wondering if I couldn't have the merchants respawn just a tad bit quicker to compensate.
Merchant inventory respawn is independent of the respawn timer. In general merchants inventory respawn twice a week, once after 3 and once after 4 days.