Thanks for the help guys. Found more info about this on the warp 9 website. Here are the details if anybody else is interested:
The ESS has a fixed amount of memory, and the controller frequency is a setting for how many motion positions per second there are, or how many times each second the velocity is sent from Mach 3 to the ESS. Having it output data faster means that if can buffer less data. If your system is running out of data, try slowing this down to a slower frequency so the SmoothStepper can go for longer periods of times between updates from the PC/Mach3.
4 kHz gives a buffer of 250 ms or 1/4 second: This provides a faster response to commands like feed hold, since it uses only a quarter second buffer. However, your PC needs to be able to supply the data transmissions to the SmoothStepper fast enough (newer PCs that are not low end, and that are running properly, can handle this). While this provides for a snappier response, it will not be reliable for all machines and you may experience run out of data errors.
2 kHz gives a buffer of 500 ms or 1/2 seconds.
1 kHz gives a buffer of 1000 ms or 1 seconds: This is the default value most machines should use.
500 Hz gives a buffer of 2000 ms or 2 seconds.
250 Hz gives a buffer of 4000 ms or 4 seconds: Slow PCs can run this speed, and with a 4 second data buffer, it will make it hard for them to run out of data. This setting will have the slowest change in velocities out of all the settings, but should still work just fine for most applications.