What do these two settings do? I can't figure them out (perhaps I am slow). They are both set at 10, and I am not sure what exactly they drive. Or do they even work at all?

They do work and they control the bonus of armor and weapons when you improve (temper) them at the grindstone/workbench. I don't know the exact formula, there are other game settings that affect this (like fSmithingConditionFactor). I'd like to know the formula as well since the bonuses you get behave a bit inconsistently when I altered the game settings and adjusted the way smithing improvements work via perks and keyword conditions.