The "configure for submission" custom rules define which songs to submit to last.fm based on their tag data (e.g. only submit files with a Media Type of 'Audio' and Media Sub-Type of Music). What you fill in here will depend on how you have your library tagged. My own filter is to send all music (including videos) that are not missing artist or track name info.
[Media Sub Type]=[Music] -[Artist]=[] -[Name]=[]
As far as when the songs are submitted, I believe I recall that it used to be that the songs would be submitted to last.fm at 50% played (the same time as the [number plays] field increments in MC). Then there was a change made so that last.fm would display "Now scrobbling from JRiver Media Center" on the last.fm webpage (per a user request). This change necessitated submitting the songs immediately upon play. (Note here, that this information is all assembled from vague memories, and so may not all be 100% accurate.)
Personally, I agree with you and would prefer either the old way (submitted at 50%) or something that is configurable (I don't care if last.fm shows the "now scrobbling" thing). My guess is that this falls into the "not a priority for dev time" bucket at the moment though.
-Jon