Section 'Handling Java memory limitations'
seems to be on java memory.
If you have a look inside, it is on the -X and the -D options.
The -X option is on more than memory and so is -D.
If you have a look at ov-java.cc,
all options are allowed now, as does Matlab.
The documentation still assumes a restriction
which has been removed ages before.

As shows
http://de.mathworks.com/help/matlab/matlab_env/java-opts-file.html

Matlab looks up java.opts in two different locations.
one, the java home folder which is for octave where javaclasspath.m resides.
another the cwd.
We shall add, as javaclasspath.txt is looked up in the home directory also for java.opts the home directory.

Unlike for javaclasspath.txt, the java.opts shall not be appended
but the more specific one replaces the less specific one.
and