It affects the sensors. Basically, if you play at 1:4 scale, everything is closer together and underwater you can see enemies out to about 30.000 yards, which means you can see the entire 'tactical picture' in 3D. As a consequence, everything happens faster and alleviates the need to use time compression. It is the same distance compression factor we used in Atlantic Fleet.
I personally liked this setup a lot - it is the most similar to TC's SSN.
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