diff --git a/README.md b/README.md
index 558bedf..76decc0 100644
--- a/README.md
+++ b/README.md
@@ -129,7 +129,10 @@ Please follow your shell instructions to install them.
 
 Environment variables need to be setup before you can start using fnm.
 This is done by evaluating the output of `fnm env`.
-To automatically run `fnm use` when a directory contains a `.node-version` or `.nvmrc` file, add the `--use-on-cd` option to your shell setup.
+
+> [!NOTE]
+> Check out the [Configuration](./docs/configuration.md) section to enable highly
+> recommended features, like automatic version switching.
 
 Adding a `.node-version` to your project is as simple as:
 
@@ -178,7 +181,7 @@ fnm env --use-on-cd | Out-String | Invoke-Expression
   ```powershell
   notepad $profile
   ```
-  
+
 #### Windows Command Prompt aka Batch aka WinCMD
 
 fnm is also supported but is not entirely covered. [You can set up a startup script](https://superuser.com/a/144348) and append the following lines:
@@ -214,6 +217,10 @@ call "%CMDER_ROOT%\bin\fnm_init.cmd"
 
 You can replace `%CMDER_ROOT%` with any other convenient path too.
 
+## [Configuration](./docs/configuration.md)
+
+[See the available configuration options for an extended configuration documentation](./docs/configuration.md)
+
 ## [Usage](./docs/commands.md)
 
 [See the available commands for an extended usage documentation](./docs/commands.md)
diff --git a/docs/configuration.md b/docs/configuration.md
new file mode 100644
index 0000000..d64af88
--- /dev/null
+++ b/docs/configuration.md
@@ -0,0 +1,72 @@
+# Configuration
+
+fnm comes with many features out of the box. Some of them are not activated by default as they’re changing your shell default behavior, and some are just a feature flag to avoid breaking changes or just experimental until we decide it is worthwhile to introduce them.
+
+All these features can be configured by adding flags to the `fnm env` call when initializing the shell. For instance, if your shell set up looks like `eval "$(fnm env)"` then you can add a flag to it by changing it to `eval "$(fnm env --my-flag=value)"`
+
+Here’s a list of these features and capabilities:
+
+### `--use-on-cd`
+
+**✅ Highly recommended**
+
+`--use-on-cd` appends output to `fnm env`'s output that will hook into your shell upon changing directories, and will switch the Node.js version based on the requirements of the current directory, based on `.node-version` or `.nvmrc` (or `packages.json#engines#node` if `--resolve-engines` was enabled).
+
+This allows you do avoid thinking about `fnm use`, and only `cd <DIR>` to make it work.
+
+### `--version-file-strategy=recursive`
+
+**✅ Highly recommended**
+
+Makes `fnm use` and `fnm install` take parent directories into account when looking for a version file ("dotfile")--when no argument was given.
+
+So, let's say we have the following directory structure:
+
+```
+repo/
+├── package.json
+├── .node-version <- with content: `20.0.0`
+└── packages/
+  └── my-package/ <- I am here
+    └── package.json
+```
+
+And I'm running the following command:
+
+```sh-session
+repo/packages/my-package$ fnm use
+```
+
+Then fnm will switch to Node.js v20.0.0.
+
+Without the explicit flag, the value is set to `local`, which will not traverse the directory tree and therefore will print:
+
+```sh-session
+repo/packages/my-package$ fnm use
+error: Can't find version in dotfiles. Please provide a version manually to the command.
+```
+
+### `--enable-corepack`
+
+**🧪 Experimental**
+
+Runs [`corepack enable`](https://nodejs.org/api/corepack.html#enabling-the-feature) when a new version of Node.js is installed. Experimental due to the fact Corepack itself is experimental.
+
+### `--resolve-engines`
+
+**🧪 Experimental**
+
+Treats `package.json#engines#node` as a valid Node.js version file ("dotfile"). So, if you have a package.json with the following content:
+
+```json
+{
+  "engines": {
+    "node": ">=20 <21"
+  }
+}
+```
+
+Then:
+
+- `fnm install` will install the latest satisfying Node.js 20.x version available in the Node.js dist server
+- `fnm use` will use the latest satisfying Node.js 20.x version available on your system, or prompt to install if no version matched.