LFE is low frequency effects.
A source with a dedicated .1 channel will send signals to the subwoofer. That could come from Blu Ray, DVD, HDTV with a Dolby 5.1 signal or even games.
FM radio, CD's, MP3's and stereo signals do not have a dedicated LFE channel. So in order for the subvwoofer to kick in the front speakers must be set to small.
If you have to turn the subwoofer volume all the way up then your receiver is probably not configured correctly. It doesn't look like this model uses Audyssey room calibration like the NR515 and higher models. But I think this receiver does still send test tones to each speaker. I have a hunch the subwoofer channel level is really low on the receiver in comparison to other speakers. You should check that in the setup menu.