New member to the forum here, who is highly amused by the restroom logo they've assigned to my avatar image.
Tascam only supplies the owner's manual in the product box which as you say is really basic. You can download the much more detailed Reference Manual from the download section of Tascam's DR-40 product page. But I'm not sure if it covers what I'm about to write. I found it online, elsewhere.
Doing the math on 44.1 kHz x 2 channels x 16 bits you get 1411 kilobits/sec for the raw data, before it is encoded into MP3 and recorded. The 32 kbits/sec setting therefore is compressed* by 44:1 which can't avoid some rather noticeable damage to the sound spectrum. That lowest quality setting is probably well suited to recording voices in a business meeting but maybe not much else. It would have been nice if the manual mentioned appropriate scenarios for the different settings.
My understanding is that WAV is not compressed, so if the file sizes are acceptable, you've settled on a good solution for your music.
(*compression in this case refers to digital data compression, not audio level compression in the voltage or sound pressure domain)