Setting the prescaler on timing circuit for LC meter?
I take it that you are trying to develop from scratch some Arduino firmware that duplicates the PIC firmware that comes with the kit. With no more detail than that, I can only answer your question in general terms.

To get the maximum resolution for your L or C measurement, you need to have a largest possible number of significant bits in your frequency measurement. This means that the time period over which you're counting needs to be comparable to the time it takes the counter to overflow, without actually letting it overflow. Since the frequency, and therefore the overflow time, is the unknown in this project, your firmware will have to do a search, trying different intervals (or different prescaler values) until it finds the best one.