The VFS option is set to false to enable FILE based URLS to be passed to the persistence provider at deployment time (see javax.persistence.spi.PersistenceUnitInfo). The default is true, which enables VFS based URLS to be used. Some persistence providers may need jboss.as.jpa.vfs to be false, for application deployments to be (successfully) scanned for entity classes. Also see doc about adding the "org.jboss.as.jpa.vfs" property to the persistence unit (which overrides the global default VFS setting).
The extended persistence inheritance type, controls how JPA extended persistence context (XPC) inheritance is performed. XPC inheritance only occurs between stateful session beans used within the same EJB3 thread. This might be a stateful bean that injects other stateful beans (directly or via JNDI lookup).
With DEEP extended persistence inheritance, the extended persistence context is always shared at the top most stateful bean level. Even if the top level bean does not have an extended persistence context, sub-beans (siblings) will share the extended persistence context (requiring fewer copies of entities to be loaded).
With SHALLOW extended persistence inheritance, the extended persistence context is only shared between a stateful bean and its parent bean. This means that sibling stateful beans with the same parent bean, will have isolated persistence contexts (assuming the parent bean doesn't have an extended persistence context).