That was really good. Thank you - the examples help a lot. So why would someone want to set block 1 higher than this example?:
What benefit could I gain by doing this instead?:
DefaultHeapInitialAllocMB=769 or higher
In other words - Is it better to have the expanded X64 system memory or have more MB (greater than 768) in block 1? If it's not better to have more than 768, does the game run worse or better with the use of expanded X64 system memory (set to true)? My hunch would be that it's better.
Well, the only reason why anyone would need to set DefaultHeapInitialAllocMB higher than 768 is when the actual "Block 1" heap usage in-game reaches 512MB, and you get a CTD.
That's why Sheson's Memory Block Log tool is so very useful. The recommended value to start with for DefaultHeapInitialAllocMB is 768, but what you actually need to set it too depends heavily on the kinds of mods you have in your load order, and whether you've set uGrids above the default of 5.
In truth, a lot of people probably don't need to set DefaultHeapInitialAllocMB at 768, because if they used the Memory Block Log tool they would find the actual "Block 1" heap usage never even gets close to 512MB.
However, for people that have a lot of mods adding spawned creatures, NPCs, and other exterior worldspace elements - like myself - setting DefaultHeapInitialAllocMB to 768 is not enough.
In my current play-though (on hold while I get ready to move back to the USA), I have had to bump up my DefaultHeapInitialAllocMB value no less than 8 times. What happened was I entered an area of the exterior worldspace where I had not gone before which pushed the "Block 1" heap usage to the same as I had allocated, and *boom*, I got a CTD.
So, at this point, my DefaultHeapInitialAllocMB is set to 992, and if I turned on ExpandSystemMemoryX64, Skyrim would insta-crash on startup, unless I set ScrapHeapSizeMB to 256, of course.
Anyhow, in your case, it's pretty clear that you probably don't need to set DefaultHeapInitialAllocMB any higher than 768, but if you ever experience a crash that keeps happening in a certain area of the exterior worldspace, I'd recommend using the Memory Block Log tool to check if your "Block 1" heap usage is hitting the allocated limit.
You have the "luxury" of being able to choose if you want to set ExpandSystemMemoryX64 to true or false. If things are stable and working fine, then why change anything?