1) AFAIK, because the torpedoes could be set that deep. Tactically, I can't think of any reason to use that depth. Although if you knew the torps' guidance had a tendency to run shallow, you might use it. (Early torps had a tendency to run DEEP, IIRC.) It's there in the game prolly because the RL TVR had that settings range.
2) Are you using h.sie's patches? If so, bad weather causes erratic torpedo behavior if the torps are set too shallow. IIRC, the rule of thumb is that the torp may run erratic if the torp depth setting (in meters) is less than 0.4x the wind speed in meters per sec. Look in Readme_V16B1.pdf in V16B1-Patch-Kit.7z.
3) If all you want is warship or merchant, the contact report, whether visual or sound, will give you that. If you want ship ID, then you have to have Weapons Officer assistance enabled. That's a "realism" (sic) deduction in stock and some megamods, but not in others.
4) In stock, you get a renown deduction for sinking Axis ships ( -10x tonnage) and neutral ships ( -1x tonnage). In megamods, the deductions are often set lower. (I play with -1x Axis and -0 neutral, based on discussion on this forum about how little penalty was historically imposed.) It's in the Basic.cfg file if you want to reset it. Other than that, there is NOTHING you will be penalized for EVER. While on patrol, you can do whatever you want. The game gives NO FEEDBACK regarding whether BdU is pleased or disgusted with your performance. Meh.
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