The cordless drill you mention like many has a clutch that disengages the drive at certain times.
Torque is the amount of force available to turn the chuck. So in effect, the higher the torque, the bigger the screw the gun will drive in. If you only want to drive in small screws, reduce the torque setting. This will reduce the level at which the clutch will dis-engage the drive so protecting the screw from snapping or being over driven into the work.
That does not mean you HAVE to use a lower torque setting when driving small screws.