From what I can recall it seemed like the recommended setting caused the bar to stop during long animations, such as limit breaks and magic - it would stop about a half of a second after the magic/limit was used, and end about a half second after the damage was displayed.
For attacks, it stops the ATB gauge as soon as the damage is displayed for about a half second, then resumes. If they die, it stops it until they fade away.
It also seems Wait works the same way, i think recommended just sets it to wait technically. I think each skill and spells have their own specific wait period that the game calls when they are cast.
Cool video btw.