So I have read two different things online about the water settings.  One says that Low2x shows the sun/moon and stars, aircraft and clouds.  The other says it just shows the aircraft.  Which one is correct?  I like the cloud shadows on the water but don't want to lose performance on Mid2x.  What is best?

Low 2x is the recommended setting for performance. The highest setting is not recommended - it was in the past with the BufferPools UsePools=0 setting in the FSX.cfg. Depending on your system, that is not a great tweak anymore.

 

Much depends on your system but you will get best graphics on high settings. Easiest way is to experiment with the water slider and see what you find acceptable. Then test and see if the hardware in your system can handle it. Else drop it notch and retest. You need to find a balance between eye candy and smooth flying.

When I had my water settings at high 2.x I had awful FPS around airports that had water. Now obviously some drop in FPS I could accept but I was getting 8-12 FPS. So I switched the water to low 2.x and my FPS are back around 28-30. 

 

Sure you get some very infrequent random flashes of scenery but I realized I would rather have that happen then to have nice looking water and 10 FPS.