ASP.NET IIS - when are requests queued?
This article might help to understand the settings a little better.
minFreeThreads: This setting is used by the worker process to queue all the incoming requests if the number of available threads in the thread pool falls below the value for this setting. This setting effectively limits the number of requests that can run concurrently to maxWorkerThreads minFreeThreads. Set minFreeThreads to 88 * # of CPUs. This limits the number of concurrent requests to 12 (assuming maxWorkerThreads is 100).
Edit:
In this SO post, Thomas provides more detail and examples of request handling in the integrated pipeline. Be sure to read the comments on the answer for additional explanations.
A native callback (in webengine.dll) picks up request on CLR worker thread, we compare maxConcurrentRequestsPerCPU * CPUCount to total active requests. If we've exceeded limit, request is inserted in global queue (native code). Otherwise, it will be executed. If it was queued, it will be dequeued when one of the active requests completes.