This is a tricky one to answer!
Firstly, DPI and PPI aren’t the same thing conceptually. One is a measure of the dots per inch on a printed output and one the pixels per inch of a digital display.
I believe as a result you’re kinda talking cross purposes. The windows DPI setting of 96 is the default https://support.corel.com/hc/en-us/articles/115001485408-Display-Options-How-to-change-DPI-Scaling-Level-for-displays-in-Windows-10-#:~:text=DPI%20setting%20controls%20the%20size,has%20setting%20of%2096%20DPI.
And by changing this what you’re effectively doing is scaling a ratio (as I understand it) the number of “dots” (which doesn’t make much sense in digital displays) which would make up an inch (I assume, given the windows dialog) of screen. What this results in, (by reducing DPI) is more pixels representing the same inch that 96 would have, thereby given a fixed hardware resolution display making the screen elements appear smaller.
As a side point, Windows 10 has done away with this dialog and shows interface scaling as a percentage.
So, context aside, your original question asks what the optimum PPI / scaling is recommended for reading a typical computer display. What you’re asking is at least two questions.
The reason it’s at least questions is that the output “size” of text on screen is a function of both PPI and scaling. For example, a 24″ 4k monitor with a high DPI and scaling of 200% will look identical (in size) to a 24″ 1080p monitor with a scaling of 100%. The 4k monitor will look sharper at this setting because there are 2x the pixels per inch and techniques like pixel rounding and smoothing are less pronounced.
This is especially true of mobile devices which may have a very high hardware PPI, but internal scaling (on android its just “smallest to largest” which they control. I’m not aware of the technical scaling factors used here, I cite it to illustrate that different devices handling scaling differently in their terminology.
Finally, we come to “optimum” there are many ways to look at this:
- Minimum text size to meet WCAG accessibility guidelines, but beyond this, recommended best practice for “base” font sizes. 9pt/12px has been given as the literal minimum before you starting failing A11y checks and should certainly not be used for body text for example where something close to 16px as a minimum would be recommended.
- Optimum font spacing, line lengths and justifications, for readability (https://www.w3.org/TR/WCAG21/#visual-presentation)
- Optimum for your content, userbase and use cases -For example if you’re expecting users to read in specific environmental conditions, you should consider this
Those three points alone could warrant and answer each, all longer that this answer!
DPI as a number in that context is largely meaningless, because it’s a measure from a single OS 20 years ago.
In summary, there is no optimum, scaling is a user controlled preference and should be treated as such, if a user chooses to change it, you should accommodate it (https://www.w3.org/TR/WCAG21/#resize-text).