The QGIS 2.2 User Guide Documentation at page 274 contains a section detailing how the different parameters operate such as the cell size, Kernel shape, Decay ratio etc. The following quote from the manual is a basic introduction to using the plugin:
"The Heatmap plugin uses Kernel Density Estimation to create a density (heatmap) raster of an input point vector layer. The density is calculated based on the number of points in a location, with larger numbers of clustered points resulting in larger values. Heatmaps allow easy identification of “hotspots” and clustering of points."
The latest QGIS User Guide is under testing but the same details can be found on page 297, if you want a more up-to-date manual. Note that this is subject to change, particularly the page number.
Hope this helps!