Reflex, 3rd axis leveling really comes into play out to yardages past 40 yards, while this is my opinion from first hand experience, it is based on years of practical findings.
If you bolt on a 3-5 pin sight and shoot out to 40 yards, 3rd axis rarely makes a difference. However, when you are pushing the limits of your equipment for practice sake, 3rd axis can assist you in providing more than the basic elevation and windage adjustments common to most low end sights. Often used in conjunction with a bubble leveler or pin wire, 3rd axis allows you to fine adjust the left to right pitch of the entire pin gang.
If you have top 20 pin set and bottom 80 set and all pins from top to bottom are in line perfectly, 3rd axis allows you to set the gang in paralell with the riser...
For instance, if you took the above description and 20 was hitting to the right and 80 was to the left, 3rd axis would allow you to pull the pins into form along your riser...
3rd-Axis adjustments can be adjusted so that the entire sight housing can swivel inward (to a position less than square) or outward (to a position beyond square). At first glance it would seem that setting the sight for a perfect 90║ would be best (center sight in photo). But that isn't always the case. Most shooters hold their bow with some degree of hand-torque (slightly twisting the bow's riser to the left or right). The 3rd Axis adjustment helps to compensate for that. And since everyone shoots a little differently, a proper 3rd Axis setting is actually unique for each individual shooter. For some, dead square is still correct. For others, it's not.
I hope I didn't confuse you further!