EEPROM and CONFIG macros on PIC with HI-TECH compiler
Your understanding of __EEPROM_DATA is correct. While it may be convention to use code such as the following to make code more readable (this is just an example, not a decode of the above):

__CONFIG(WDTDIS &amp; HS);


The constants are just defined in an include file for the specific part. While not as readable the hex value 0x03d4 is valid and ends up in the configuration bits. In binary 0x03d4 is 0000001111010100 so you need to check the datasheet for the particular part in question to see what bits are being set.