That's what the option does. It is intended more for diagnostic purposes (as we have used it here today) than to be left on all the time.
(There's another option which disables notifications only on network drives, which some people need to work around things like bad NAS devices which constantly send changes for no reason.)
That wouldn't be great on large and/or slow directories. Every time you flicked from Opus to another window and then back again, Opus would re-read the entire directory, adding a delay each time you switched back and losing your file selections and scroll position. It'd be like pushing F5 every time you clicked on Opus.
We do have some improvements to the change notification system planned for a future version, but whether or not they help in your situation is hard to guess. One or two people have had a problem where there is so much filesystem activity from other processes, and on devices like network drives where it can take a long to process each event, that new events happen faster than the old ones can be processed. We plan to detect that happening and have the lister stop processing events accordingly (with some UI to alert you and allow you to turn processing back on when it suits you).
After seeing the the context switch delta reduced, did you also see your actual performance problem go away?
What is causing all that background filesystem activity? It's possible that whatever is accessing all those files non-stop is causing the problem, rather than (or as well as) Opus responding to the changes. Be careful not to confuse a symptom with the cause.
If you want to see which files are being accessed to trigger all that activity -- which may in turn point to what is accessing them -- you can make Opus output a list of the events it is responding to. Details are in the 2nd last section of this guide.
Layouts are described here: gpsoft.com.au/help/opus10/defaul ... youts1.htm
The video about working with multiple windows, in the tutorial section here at the forum, goes into them (and other things) in some detail as well. (The video is a little old but the concepts haven't changed.)
(BTW, you can use blank lines in forum posts without any problems. It won't submit the form or anything like that, and you don't have to remember to use Shift-Return like on Facebook and similar sites. Adding them between paragraphs will turn a wall of text into something much easier to read.)