"To each, their own." This is my current way:
Varied Clusters, 1000 stars, 15x15
Starting, Chaos, Hard or Very Hard (I admit "Hard" is very easy, but I only play that level for fun)
Normal research, no creatures
A few, normal strength pirates, with no re-spawn. (I've noticed the game seems to generate way more pirates on "Very Few" than it does on "Few"?!)
Colony prevalence: Abundant; Indi Alien Life: Teaming (can form empires-and they do)( I often build a modified Monitor base and put a fleet over a favorable Indi., simply so it can become an empire)
Colony Influence range: 125%; Colonization range: 2.08 sectors
Home system Normal-Excellent (depends); Size: Starting; Tech Level 1, Corruption: Low (I don't have the patience for Pre-warp)
I randomly generate three alien empires (races, government, and size random), all with my tech level or higher, and all DISTANT from me (gives me enough time to develop a bit before we go at it)
Victory: Territory 20%, Population: 30%, Economy: 25%; 80% threshold at 80 years; ends in 110 years
Enable: original DW story events, Race-specific events, Tech trading (I use it more to give my higher tech to a weaker ally-sort of like foreign aid)
Plus my own "house" rules to keep from "cheating"
250 stars in a 15x15 galaxy can be great fun, too.
I once heard there was a garage, which some said was air tight.