I have the same temp controller as you. First of all, you want to insulate and tape the probe to the fermenter once its inside the chest freezer. This way it will regulate the BEER temperature, not the temperature inside the freezer. Your freezer will basically ‘chase’ the temperature you want. It may get a degree or so higher, but it works great. Essentially, think about it this way:
Scenario 1: you want to keep the beer COOLER than ambient air outside the freezer/chamber (most typical). You want the controller set to cooling mode, then plug in the freezer. I believe the instructions refer to this as “cut in at setpoint”. This essentially means that once the probe reads a temperature that is higher than where you set it, the COMPRESSOR will “cut in” and COOL the freezer, thereby cooling the beer.
Scenario 2: you need to get the beer WARMER than ambient air outside the freezer (more for winter time). I have a brewpad (heating element) stuck to the inside of the freezer. You have to switch the jumpers inside the temp controller casing and plug the controller into the heating element (in my case the Brew Pad), as opposed to plugging in the freezer/compressor. This will “cut out at setpoint”. In other words, if you need to keep an ale at 66* in your basement, which has an an ambient temp of 55, the heater inside your (my) chest freezer will run UNTIL the beer/probe gets to that temperature, then it will cut off once it gets there.
They make ‘dual stage’ controllers, where you just ‘set it an forget it’, which is a nice luxury, but the set up you have works great.
Its a little confusing at first, but this is going to make your beer light years better.