As long as the live level is not clipping the input, it really doesn’t matter.  “Whatever sounds good to you” applies.  

Excuse my ignorance but would clipping happen at a higher line in level? Sorry not sure what that means lol 

Just changed it to 5 as I've read it's a good idea to set it so that the volume is similar to the volume when streaming. You can see I'm guessing at this can't you

Clipping would likely happen at higher volume levels, yes, as the circuitry would not be able to handle the ‘volume’ of the data, and start failing. 

A Line-In has a certain sensitivity. A certain amount of amplification is available. We often refer to this as “Gain”. There is a limit to how much signal Line-In can handle. If input voltage is high enough that (input x gain) would result in an output voltage higher than is possible (such as asking a 50W amplifier to deliver 1000W), the output is “clipped” at the max level. This results in extremely high, ugly sounding distortion. If you like visual analogies, since audio signals can be represented as a summation of a bunch of sine waves, the tops and bottoms are straight lined, “clipped” at the max.

The Line-In adjustment sets the Gain.

Thanks for that great explanation @buzz . I've settled on number 4 for the line in 

The sampling ratio has a limited dynamic range (lowest volume to highest volume levels in a passage of audio).  Since on-the-go sampling like the Line-In has no way of predicting the incoming dynamic range, it sets it for an average.  If the input suddenly comes in at a very high volume, the highest volume is “clipped” off to fit the passage into the set range.  The same thing happens to analog circuitry when an amplifier reaches its limits and can’t go louder without damage.  

Oh, for a whiteboard;)

Might be interesting to fool with different settings and see which sounds best.

Something I have done when I had multiple gain controls in an audio string was to look for the lowest background noise / hiss I could get while having the music play at reasonable volume levels. As above you need to avoid to much gain settings and clipping the signal peaks.

Been a long time but I’m recalling having the first two devices set to about the 1/3rd of the maximum gain and using the last as the actual volume control gave me the least noise.

I've actually now put it back down to level 1 - the lowest line in setting. Surprised at how loud it is on that setting. I did buy a new stylus which I fitted today but it's on the same cartridge as before so I doubt that's made a difference to the volume. It is the most expensive stylus I've ever bought mind you. 

A new stylus will not change level, but it can result in improved sound and reduced record wear. A rule of thumb is 1000 playing hours for stylus wear, but some users will become dissatisfied at 500. Each playing causes wear. Track near the recommended high. Yes, it’s true that higher tracking force wears everything faster, but if you are tracking so low that the stylus bumbles around in the record groove, there will be catastrophic record damage on a single playing rather than a slow erosion.(And it sounds terrible)

Proper cartridge alignment is critical. Unless you have done this yourself, assume that it is not correct. Here is a protractor to start with. Anyone who suggests that you don’t need a two point alignment doesn’t know what they are doing. And there is relatively little published about this. In addition to the offset angle and overhang resulting from using this tool, you need to pay attention to the vertical alignment (view from the side). Ideally the bottom of the cartridge body is parallel with the record surface and the top of the stylus will be inclined about 20 degrees toward the spindle and exactly 90 degrees when viewed from the front. Angle of contact with the record is more important than body parallel and each cartridge sample and record is slightly different. If you can adjust arm height after using shims for gross alignment of the 20 degrees this is the easiest to implement strategy.
 

The 20 degree adjustment is the most difficult and critical because each cartridge and record is slightly different. Make small adjustments with the arm height and listen to the result using a very busy classical disc. When you get the angle right magic will happen. Unfortunately, this magic adjustment varies slightly from record to record. If you want to be anal, arrange an arm height adjustment measurement technique and mark each LP with its magic number. Unfortunately, when you next time replace the stylus, the magic height will most likely need adjustment.