The LFE (low frequency effects) channel is used in Dolby Digital 5.1 and DTS 5.1/6.1 soundtracks, and can contain bass up to 120 Hz, I believe. At the Dolby reference level it can peak at up to 115 dB, but apparently (according to Denon), many films do not make much use of the LFE channel.
To get the correct speaker volumes set up, you should use a SPL meter and the test tones produced in your Dolby Digital decoder/receiver. The operating instructions for your decoder/receiver should tell you how to do this.
I don't know what the LFE button of your Bose speaker system does, but if it sounds good with it on, then use it. It might boost low/sub bass while the bass control adjusts higher bass, ie. above 120 Hz.
You should note that getting your system set up technically correct might not be the best thing to do, as you need a very good set of speakers to produce the full Dolby reference level volume. Having a higher bass setting at volumes lower than the reference level, I find, improves the sound quality. THX has done research in the past which found that the average person likes having the bass and treble pushed higher than their 'correct' levels.
The Dolby reference volume is very loud as well, which is not necessarily what you might want, seeing as many films, especially action films, are mixed to excessively loud levels.