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Other reasons why I think having no externals makes SH3 more challenging include identification. Much more difficult, and you don't instantly know if the target is armed.

All air contacts get treated the same. Dive. No > key to quickly check whether it's friendly. You can no longer watch your torpedos. No externals and event cam combined with manual targeting really is awesome. You set up your shot and fire. The timer ticks past, and no explosion. As you curse your miss the torpedos hit.

The phenomenon that occurs when looking at a silhouette also plays a part. It's often difficult to tell if a target is coming or going.

When I first started playing SH3 I used externals to gawk at everything too. But that novelty only lasts so long, and I eventually want to make things as challenging and realistic as possible. Playing without external views is certainly making ground in this regard. It's like a different sim.