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The Shadowlet Setting group provides a soft, self-shadowing for the particle volume. Shadowlets create a shadow off the main light. You could call it a 'projected shadow'. This is a volumetric, cone-shaded simulation of the shadow from the light's perspective.
Why a Shadowlet? Let's say your composition has a lot of particles. Realistically, the center of that particle cluster would be obscured by all of the particles around them. You will want the clustered mass in the center to not be so brightly reflected. Shadowlet takes care of this issue, and adds to the believability of the scene.
How it works. If you move an After Effects light around your composition, you'll see that the shadow it creates reacts to the Shadowlet input. If you rotate the comp to look from behind or at another angle, you'll see the Shadowlet stays in its central location but its shading shifts with the angle.
Shadowlet pop-up: Enables self-shadowing for particles in the main system. By default the popup is set to Off. Set it to On to get an instant depth perception. This happens as the comp recognizes the Shadowlet light.
At left, Shading is on, Shadowlet is off. At right, Shading and Shadowlet are on.
Light Name > Choose Name: Shadowlet is recognized with the Shadowlet field in the Light Name panel. When a comp light has the same name as the Shadowlet's Light name, that light will be used to control the location of the Shadowlet's shadow.
Enter a name in the Shadowlet field, and use that same name for the light layer in your Timeline. This will make the light recognize the Shadowlet. By default, Form assumes that this light is named 'Shadow' and that is often an easy standard to use. But the Light Name can be changed to anything as long as the light's layer name matches. The Options Panel is opened by clicking the Choose Name… button immediately below the Shadowlet pop-up.
Color: Controls the color of the Shadowlet's shadow, letting you choose a color that makes the Shadowlet shading more believable. You should typically use a dark color, like black or dark brown, that corresponds to the darker parts of the scene. If you have a colored background layer or if the scene has a tint, the default gray color of the shading generally doesn't look believable.
Color Strength: Controls how strong the RGB is weighted in against the particle color when computing the Shadowlet shadow. Strength sets how the shadowlet Color is blended with the original color of the particle. Set to 100 by default, which gives full coverage. Lower values make the Color less blended.
Some particles do not have a defined color, such as Sprite and Textured Polygon. In such cases, Color Strength should always be at 100. All other particles types, like Sprite Colorize/Fill and Textured Polygon Colorize/Fill have a well-defined color.
At left, Color is black (the default). In middle, Color is blue, Color Strength at 40. At right, Color is blue, Color Strength at 80.
Opacity: Sets the opacity of the Shadowlet shadow, which controls how strong the shading is. Default value is 5. Opacity should typically have a low setting, somewhere between 1 and 10.
You can increase the value to crank up the opacity of the shading. In some cases higher values can work, for example, if particles are very spread apart. But in most cases, particles will be pretty densely packed and if so, a low value should be used so the shadow does not appear too dense.
Adjust Size: Affects the size of the Shadowlet shadow. Default value is 100. High values give more coverage. Lower values create a smaller shadow.
Left to right, Adjust Size is 50, 150 and 350.
Adjust Distance: The distance the Shadowlet moves from the direction of the Shadow Light. Set to 100 by default. Lower values place the Shadowlet closer to the light and therefore the shadow cast is stronger. Higher values move the Shadowlet farther away from the light source and the cast is lighter.
It is useful to set Distance to 0 initially if you have multiple lights and you don't know which one to set as the main shadow-casting light.
Placement pop-up: Controls where the Shadowlet is positioned in 3D space.