AA makes things fuzzy in order to correct sharp edges. Things like wing edges, gun barrels, antennas, wires; they all look too sharp (pixelized) in most games. AA works to get rid of this by gently blurring hard edges out. At the low end (2-4x) you can get a good visual effect without taking a frame-rate hit from hell. Crank it too high and you may wind up needing glasses to sharpen what looks like a Gaussian blur gone berserk!
AF (anisotropic filtering) doesn't make things fuzzy, it makes them sharper. Specifically, it sharpens up mip-maps. In some games, such as FS2k2, this can make an amazing difference as the mip-mapping is done at very low quality. Kicking AF on to 4x makes the mip-map edges non-existent, resulting in gorgeous visuals. However! Activating AF in games that do have good or great mip-mapping implementation (such as LOMAC) simply winds up giving you a lower frame-rate with little to no visual effect. Look at
Wiki's page for AF and you'll see exactly what it is, what it does, and how the end result looks.
A word of warning: AF is
very heavy in both video memory and video processor workload. Use at your frame-rate's peril.
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Flakbait [Delta6]