Permalink Base = Query Var?

I am also wondering how is the Query Var field used. The link in WP plugin info page leads to a page with a link to github page which says nothing to see there.

Class.client.php seems to be the code where it’s used, starting from line 42:

// Rewrite
if ( $taxonomy['rewrite'] == 'true' ) {
  $taxonomy['rewrite'] = array( 'slug' => $taxonomy['query_var'], 'with_front' => true, 'hierarchical' => false );
}

This is because of a bug in the code, if you want to restore this logic until the dev gets around to it, you should be able to edit class.client.php. I have posted changes in the gist below but here is a summary. Make sure to update your permalinks after setting the query var otherwise you might run into some issues with links not working.

to replicate how the var was being handled i first added

$taxonomy['rewrite'] = (boolean) $taxonomy['rewrite'];

above line 43

if ( $taxonomy['rewrite'] == 'true' ) {
$taxonomy['rewrite'] = array('slug' => $taxonomy['query_var'],'with_front' => true, 'hierarchical' => false);
}

which i also tweaked a bit to be

if ($taxonomy['rewrite']) {
$taxonomy['rewrite'] = array( 'slug' => $taxonomy['query_var'], 'with_front' => true, 'hierarchical' => false );
}

then removed

(boolean)

from line 56

'rewrite' => (boolean) $taxonomy['rewrite'],

https://gist.github.com/1621776/4ad0180cd370508d04fd4976bad761848384589e

How does the Query Var setting behave after this?

Thanks for reporting
This bug will be fixed on version 3.4.1

Changes on :
https://github.com/herewithme/simple-taxonomy/commit/f1fe8bd6c6d02643e3a23da8e0a0258080728442