Does the "Draw FPS" shows generated FG frame (am I using FG correctly)?

[deadge]

Context: I'm using a 165 Hz 2k ultrawide monitor and RTX 3080, G-sync/V-sync disabled in Nvidia control panel, and I'm playing games exclusively using windowed or borderless windowed mode (borderless fullscreen).

Case 1: Let's say I'm playing a video using mpv.net video player or video in general with chrome, and using RTSS it's showing that it's capped at 60 FPS. Using "Vertical Sync" at "Max refresh rate" and "LFFG" turned on (in LS), I was able to hit the 165 FPS monitor cap shown by the "Draw FPS" toggle. In this particular case, am I using FG correctly or am I supposed to use "1/2 Refresh rate"?

Case 2: I'm playing an indie game that's locked at 60 FPS (limited by the game engine), but using RTSS it's showing that my GPU generated 165 FPS (using the same settings as case 1). Am I supposed to use "Max refresh rate", "1/2 refresh rate", or potentially even "1/3 refresh rate".

Case 3: I'm playing a game with no FPS cap and my GPU was able to generate 90-100 fps, in this case (using the same settings as case 1) do I use "Max refresh rate", "1/2 refresh rate", or "1/3 refresh rate".

[(ノ°□°)ノ]

It all depends on which capture API you use. By default, LS uses the DXGI API, which captures at the source frame rate. When using LSFG, the "Draw FPS" option should output exactly twice the original frame rate. If it doesn't, something is wrong with your setup and FG isn't working properly. Most often the cause is either a driver setting (everything should be default for LS as any sync or latency setting can break it) or some kind of overlay (eg nvidia experience or even windows activation reminder).
For the WGC API, things are a bit different, as it captures at a WDM rate, which can be anything from the game's frame rate to the monitor's refresh rate. This is why it is necessary to lock the game at half LS frame rate (which can be limited by vsync options) when using this API.
In short, you don't need to do anything for DXGI as long as your driver settings or overlays don't interfere.
For WGC and 60 FPS content, change the refresh rate to 120. If your game can output more, lock it to 82.5 FPS (165/2).