Ok so that link still suggests that it can be set to either a boolean or an integer.
The definition of boolean says:-
When converting to boolean, the following values are considered FALSE:
* the boolean FALSE itself
* the integer 0 (zero)
* the float 0.0 (zero)
* the empty string, and the string "0"
* an array with zero elements
* an object with zero member variables (PHP 4 only)
* the special type NULL (including unset variables)
* SimpleXML objects created from empty tags
Every other value is considered TRUE (including any resource).
Since the current value is '1' then it is treated as an Integer whereas 'on' is not an integer and doesn't satisfy any off the above so it will be treated as boolean true.
I guess your host is worried because 'on' implies 'unlimited' and they may be worried if the files are very large as it may grab all the server memory.
So the current value of '1' is bad - as this probably means '1 byte'. Hence their suggestion of a limited value such as 4096. I 'think' this value is 'bytes' - so check the size of your included file and if it is > 4096 then ask for a bigger value.
So go with the 4096 but it may be worth asking if they will allow 'on' for a trial period. If 'on' works but '4096' doesn't then you may need to increase the '4096' value. ie 'on' means 'infinite'.