Hi,
There is no option to let the user choose how many points he wants to use. He can either use as much as possible or no points.
The limit allows you to have a minimum limit that the user has to reach before he can use his points. So if you set it to 50% and he has 100 points but his order requires 300 points, he won't be able to use his points, but if the order requires only 150 points, he will be able to use his 100 points and it will still have 1/3 of the price to pay with another payment method.
And yes, the user points display on the checkout is just to display information about his points to the user.