Yes it will be skewed. These types of tools need to be run for bench-marking purposes prior to anything being put on the disks (so the numbers can be more true). Yes that represents the queue length and from what I've read, I don't believe there's any benefit going beyond 32
The # of Outstanding I/Os control specifies the maximum number of outstanding asynchronous I/O operations per disk the selected worker(s) will attempt to have active at one time. (The actual queue depth seen by the disks may be less if the operations complete very quickly.) The default value is 1.
Note that the value of this control applies to each selected worker and each selected disk. For example, suppose you select a manager with 4 disk workers in the Topology panel, select 8 disks in the Disk Targets tab, and specify a # of Outstanding I/Os of 16. In this case, the disks will be distributed among the workers (2 disks per worker), and each worker will generate a maximum of 16 outstanding I/Os to each of its disks. The system as a whole will have a maximum of 128 outstanding I/Os at a time (4 workers * 2 disks/worker * 16 outstanding I/Os per disk) from this manager.
The user's guide for IOMeter can be viewed here
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