there's an option for this in sandbox mode, but i don't know what it means
Pretty much what it says. Checking it allows the AI to use more of your CPU to do its work, causing it to make better decisions. It's off by default because it can make turn changeover take longer, but personally I always leave it on.
how much better are the decisions?
I read one effect of enabling this feature allows the AI to make new ship designs twice as often. That's means they should respond faster to an enemy's weapons and defense choices.
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