0 means 'OFF'
* means 'Frost Protection' (Usually set at around 7 degrees so basically the house and the pipes don't freeze. If you're away for a week or weekend, either leave as is or just drop to 1. If you plan to vacate for weeks or months maybe consider frost protection setting)
Many German thermostats go from 1 through 5 with 1 being ~12C and 5 being ~28C. The middle setting is usually around 20C. As these things aren't digital they can vary by a little (+/- 1C) but are usually pretty good. Some models have the ability to set max and min values by the landlord, so you can't go too hot or cold. Don't be surprised if you might not be able to switch yours off or all the way up to 5. If it's an issue talk to the landlord.
As scoffer suggested, the little pin in the middle can wear down over time which would result in them running a little hotter from reference (as the pin pushes the radiator valve in less) but they should still be consistent across the range, so just set a little cooler.
In days of internet just try looking online for a user manual of your particular thermostat and you will likely find an exact answer. Example here for Oventrop.
As murphahp said don't touch the valves at the bottom. They're set by the plumber at time of installation to balance the rads in the flat and you will mess everything up if you play with them.
If your rad is always cold, especially at the top and maybe warm halfway down, you likely have air in the rad that needs bleeding out. You were either given a radiator key or speak to the landlord.
Hope this helps