A lot of people fail to achieve a game's full potential and will be disappointed by how the game looks. If you don't understand anything or need some further help, don't hesitate to send me a Private Message.
I suggest I should start of by saying that no computer is the same - they each have difference pieces of hardware (bits) inside of it that are used to make it run. Some computers are built with more powerful components, thus are able to perform better under pressure. Think about it, a well trained athlete can perform better than a big lazy fat man.
What I'm hoping to do here, is tell you what each of the settings do and how you
ensure you get the best balance between the gaming looking great and running nice and smooth with no freezes as you play. I do hope you find it useful.
Note: I have tried to make it user-friendly. I found it very hard to edit out a lot of the technical details that should be in here. However, I didn't feel it was appropriate to over-complicate things thus I opted just to give the basics.
Screen ResolutionThis is probably one of the most important things you will learn about. To make it as simple as possible - I'm going to say that it's how well the screen fits to your screen. If you have a small screen, your resolution will be smaller. I, for example have an outrageously large iMac so my resolution is equally as outrageously large. In order for your computer to display something at a high resolution, it requires a more powerful Graphics Card (bit inside your computer, dedicated to the processing of Graphics).
If you are using Windows XP, the best way to find your native screen resolution is to click on your desktop and go to Properties - Settings
If you are using WIndows Vista, right click on the desktop - Personalise - Display Settings.
Make a note of this, then that's what it should be set to in-game. Note: It's also called "Screen Size" in-game. Also ensure you leave the Refresh Rate set to default. This is defined by your monitor and is basically how fast it can display images on screen. You will notice no effect at all if you change this - you may even damage it.
Edge SmoothingThis is something that everybody has a fiddle with, because if they're like me - they want everything to look perfect. Those who know a little more, may also know this as Anti-Aliasing. In this instance though, it's been simplified. It basically means, how smooth your game looks.
I'm not even going to bother trying to explain it - i'll use a picture.
The images below show the effects of Anti Aliasing (Edge Smoothing) before and after. As you can see, the lines appear a lot smoother as they have effectively been blurred out. If you think about how many lines there are in the game, then think about how smooth they'll be afterwards, it has a massive effect and looks a million times better.

However, Edge Smoothing takes up a lot of resources, and will kill your Graphics Card if you don't find a suitable level that's right for you. It wouldn't be right for me to say what level I recommend, as like I said before, it totally depends how your machine runs and how fast you want the game to be.
ReflectionsThese are exactly what the name suggests. Again though, these take up more resources as they are simply having to draw the graphics more than once. Especially if you have your other settings on High, it's having to do the same task twice thus doubling the work you're asking your GPU (Graphics Processing Unit/Graphics Card/bit) to do.
Again, test it with and without to see if you like it.
Advanced RenderingThis is effectively how much detail is shown to everything around you. It basically means that if turned on, an object will retains its detail. This is best seen on the grass. As you zoom out, the grass starts to blur thus lowering the amount of work the computer has to do. If you turn Rendering on, it will try to keep the quality as high as possible for as long as possible.
Anything with 'Detail' in the NameThis includes: Tree Detail, Texture Detail, Sim Detail and High Detail Lots
Personally I would suggest this is pretty self-explanatory. But it basically means how detailed you want the respective feature to be. So for example, if you want very life-like trees, you'd boost up the detail on the Tree Detail section. If you want like-for-life sims, then you'd turn the Sim Detail up.
Texture Detail refers to how much detail you want to be in the texture. Conventionally, a texture is anything that has a skin, design or colour on it. Imagine a wallpaper in your bedroom. If you have the texture detail on low, you may only be able to make out the basic design. The more you increase the texture detail, the more detail it will have, and shadows, shading and other small designs will become more visible.
I do hope that you found some of the above useful in some way. Like I said at the top, don't hesitate to send me a Private Message should you require any additional help.
Regards