The Directory Server and tools refer to the config/java.properties file for JVM options that include important memory settings. The java.properties file sets the default Java arguments for the Directory Server and each command-line utility including the default JAVA_HOME path.
The java.properties is generated at server setup time and defines memory-related JVM settings based on the user-provided value for max heap size if aggressive memory tuning option was selected at setup. Most of the JVM options specified for both server and tools do not need customization after setup. The exception is the -Xmx/Xms options, which specify the maximum and initial JVM heap size. See the section on Memory Allocation and Database Cache for advice on tailoring the -Xmx/Xms values.
Other than altering the heap size of the server process (start-server) or command-line tools, the most common change required to java.properties is when it is desired to update the JVM version. A single edit will apply the new JVM to all server and tool use.