What does debug.sf.hw in build.prop mean?
I believe what it stands for is "Debug SurfaceFlinger Hardware", and there's only one (that I know of) reference to it in the Android source code (in DisplayHardware.cpp):

// debug: disable h/w rendering
char property[PROPERTY_VALUE_MAX];
if (property_get("debug.sf.hw", property, NULL) &gt; 0) {
    if (atoi(property) == 0) {
        ALOGW("H/W composition disabled");
        attribs[2] = EGL_CONFIG_CAVEAT;
        attribs[3] = EGL_SLOW_CONFIG;
    }
}


Or, in English terms, the system reads the value of the debug.sf.hw flag. If it has a value and that value is equal to zero it disables hardware compositing, otherwise it skips over that block of code.

I think there's something of a misconception in that the default should be to have hardware compositing enabled, but you can set debug.sf.hw=0 in order to disable it. So really it is a debug flag, but setting it to 1 (strictly speaking, any non-zero value) would explicitly cause compositing to remain enabled. As far as I know, though, the only time it should really have an impact is if the device's default value is 0 for whatever reason.