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 :-).
exactly what they mean, don't think I've seen it explained anywhere. Looking at some of the tables (like 18-8) makes it pretty clear, though. There's probably some story about how the bits got split between the two registers. It must be a hum dinger, given that TCCR2A bit 2 is unused ... exactly the right place for WGM22