All of Buddy's recommendations I recall reading are purely about levels when recording and using a digital system.
Not for live and not for analog recording.
And another point is, the front panel knobs mean nothing if preset level itself is not correct.
The recommendations are for the front panel knobs ONLY when the presets have been leveled a specific way.
I can make presets that are very quiet or very loud. That makes the position on the knob very dependent.
Unix makes great points.
So everyone knows my own philosophy here:
1) Actually most pros level to -18dbfs. I level my presets to -12db and so are the Factory Presets.
2) When I level, I set it using the digital S/PDIF level. I want that true digital signal strength to be on the meter to set the level of the preset leaving the Axe-Fx/Axe-III/Ax8 unit from the XLRs or other "playback" outputs too.
3) It used to be (in the past) on some unit types, under various firmwares, the S/PDIF signal was fixed - it was not affected by the Output 1 settings.
So I would put both the XLR and S/PDIF signal into a console side by side, and I would set the Output 1 knob level to be equal to the S/PDIF signal. Thats's really how I determined the "optimal" Output1 knob setting for an Axe-Fx XL, Mark II, Ax8, or Axe-Fx III.
Also, I use the +4db Audio output setting (not -10db), as I am using pro-grade equipment.
NOTE: There are some XLR In pre-amps on the market (noticeably the Scarlett Focusrite) that will add pre-amp gain automatically to your signal (and it will distort at my preset and Factory set -12db preset levels) - read your pre-amp device's manual for those, and the solution is using the 1/4" inputs bypass that automatic preamp gain.
Firmwares have changed over time. Right now, this is how I have my Output levels set on my FAS devices (so the XLR signal matches the digital signal out)
AX8 - is at +4db, and Out1 Max, on firmware 10.01. I think about it as fixed output preamp on the floor and all the volume comes elsewhere.
Axe-Fx XL - +4db, and Out1 at maximum (used to be Noon! It's changed!), on ARES 1.03.
Axe-Fx III -- +4db, and Out1 at 3:00, on ARES 5.08
4) Most importantly, and per unix, the Out1 knob does NOT affect the tone -- but your ears may think it does as it increases or decrease sin volume!.
You can set it where you need to for your system. But try to think of your Axe-FX unit as a preamp and the above as optimal output settings, and then get your volume changes from the device you are sending to.
Maybe I'll do an updated video on this later... getting this leveling/gain-staging right is important to get the best and most realistic sound IMHO.