Adjustment is 0-6 (T-S), so 4/7 is 4 clicks clockwise (reverse on the rear dampers as they are inverted), with 0 being faster rebound and 6 being slower rebound
The slower the rebound, the less "bounce" you will get over single small bumps, but over repeated bumps, you would want slightly faster rebound. Swaybar size/setup will also affect this, as a stiffer swaybar is similar to increasing your spring rate (which means faster rebound)
If you've just installed the coilovers, you will find that it takes a few miles for the dampers and springs to settle in
Note that with independent rear setups + linear springs, it's impossible to eliminate "bounce" as it's part and parcel of this type of setup (but in return, you get much better performance over progressive springs). The BMW is quite a heavy car though, so isn't too bad. Try out a VW Golf or Honda Civic (later models) with coilovers and you'll know what I mean
