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Weapon Config Dispersion. It is the amount of how much bullets/shells ie projectiles miss the dead center of sights.

Dispersion is diameter of the dispersion circle in radians. So 'dispersion = 0.001' means 1 miliradian or 1 mil, which is 10 cm at 100 m. When prone, your dispersion becomes twice lower than the config value (at least it did in ArmA, so needs confirmation). So the prone dispersion might be considered the true weapon's dispersion, while the standing/crouching one has a 'human factor' built into it.

As far as your experiment with dispersion = 0.5, it's probably capped in the engine to a sensible level.