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Number of Beasts
This controls the number of megabeasts such as dragons, titans, etc, that exist at the beginning of the world. They can later die (get killed) due to historical events, so the longer the history the more likely some of these will die.
The number of beasts does not appear to impact how often your fortress will be attacked by beasts in fortress mode. In adventure mode it means it will be easier to find more megabeasts. If set very low then you may actually run out of beasts during a game.
Since beasts can attack civilizations, more beasts may reduce the population of the world a little bit.