As soundhound explained well, the calibration is intended to balance the levels from all five speakers. Follow the instructions spelled out in the manual and in soundhound's post above, and then use whatever volume level suits your needs. My wife's watching TV right now with the volume around -31dB.

With the mains set to small (as you indicate you have done), the bass management works in all modes, including stereo. However, many CD's will not include enough content at and below the crossover point to yield a significant signal for the subwoofer, making it hard to tell that the bass management is working.