Your configuration of Forest Material seems correct, it should work. Have you defined the Tint Range ? By default it is set to 0%, that doesn't generate any tint.
Anyways, if you are using 3D objects i suggest to use Forest Color. We have introduced this plugin in the latest versions, and it's specifically designed for meshes/proxies. Instead, Forest Material was designed and works better with billboards.
The explanation of Element and Item is not described in the online reference because it is updated to Forest 3.4.1, but Forest Color was included in the latest betas. In the next days we will update the website to reflect these changes.
The Elements are the mesh pieces that define an Item, as the leaves or the branches of an individual tree. Note that the Elements are not the faces of a mesh, but an upper hierarchy. Internally, Forest Color consideres an Element as each group of adjacent faces of a mesh that share the same material ID.
The Variation slider defines the amount of Color Tint applied by Item or by Element, using a weight scale from 0% (Item) to 100% (Element). You can see some sample images here:http://www.itoosoft.com/forum/index.php?topic=786.0