2:0 means bits 2 to 0 of the register/value, ie the bottom 3 bits. 7:4 would mean the top 4 bits of a byte value, etc etc.
I guess what they mean is that if I were to pretend WGM22,WGM21,WGM20 formed a 3 bit logical value, then I'd want to set it to 5 or 3 or whatever, but that is so peculiar, I sure wish I could find an official atmel document describing their strange and wondrous notation :-).
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