Summary
Sets a specified parameter property by index using a string value. This is used when passing values from a script to a script tool. If you need to pass an object, such as a spatial reference to a script tool, use SetParameter.
Syntax
SetParameterAsText (index, text)
| Parameter | Explanation | Data Type | 
index  | The specified parameter's index position in the parameter list.  | Integer | 
text  | The string value that will set the specified parameter's property.  | String | 
Code sample
SetParameterAsText example
Pass text string to specified tool parameter.
import arcpy
# Get the feature class from the tool.
#
fc = arcpy.GetParameterAsText(0)
# Determine the shape type of the feature class.
# 
dscFC = arcpy.Describe(fc)
# Set tool output parameters based on shape type.
# 
if dscFC.ShapeType.lower() == "polygon":
    arcpy.AddMessage("Feature Type is polygon")
    arcpy.SetParameterAsText(1, "true")  # Is polygon
    arcpy.SetParameterAsText(2, "false") # Is not line
    arcpy.SetParameterAsText(3, "false") # Is not point
elif dscFC.ShapeType.lower() == "polyline":
    arcpy.AddMessage("Feature Type is polyline")
    arcpy.SetParameterAsText(1, "false") # Is not polygon
    arcpy.SetParameterAsText(2, "true")  # Is line
    arcpy.SetParameterAsText(3, "false") # Is not point
elif dscFC.ShapeType.lower() == "point":
    arcpy.AddMessage("Feature Type is point")
    arcpy.SetParameterAsText(1, "false") # Is not polygon
    arcpy.SetParameterAsText(2, "false") # Is not line
    arcpy.SetParameterAsText(3, "true")  # Is point
else:
    arcpy.AddMessage("Unknown feature type")
    arcpy.SetParameterAsText(1, "false") # Is not polygon
    arcpy.SetParameterAsText(2, "false") # Is not line
    arcpy.SetParameterAsText(3, "false") # Is not point