Your monogrammer fits the Open Arm version of this model.
the shape of the Chainstitch plate is also indicative of the machine it fits - looks like you have the square one.
The SML is for the stitch modifier - on my machine it's called the "varigater" but it does the same thing. It is a small adjustment for the stretch stitch cams (they go backward and forward along with side to side) to adjust the backward/forward part, so S will have for a smaller backward/forward moving, and L will have a larger forward/backward movement. So you adjust that along with the length and width to get the pattern looking like you want.