... an agreed upon word for describing how the -app bit is used?

If something like  -app appeared in the parameter list of a command-line utility, it would be called a "switch" because it would most likely alter the behavior of the utility, e.g., by switching some behavior on or off. I and, I think, most others would be comfortable describing  -app as a switch controlling the behavior of the App::Cmd::Setup module. Update: See "switch" and also "options" and "flag" in perlglossary.