I suck at this game, and I won't even tell anyone here online what level I play at. 
That being said, I love the game and spend hours of free time playing it. It was REALLY thoughtful of the developer to have so many levels of AI to play at simply because losing all the time is no fun when trying to relax. This game has and will become one of my all time favorites, and like many of you I have played a lot of games.
Thanks for all the input and thought that you have put into your posts, I know it takes time away from playing the game.
QUESTION:
How do you organize your fleets? I am still at the level where I just build every freaking ship there is into one massive fleet (over 1000 ships) and send them on their way, reinforcing as necessary. Obviously I'm playing at a very low level.
1. What is kiting?
2. How do you use your Starships to best advantage? (I just make them and stick them in with everything else.)
3. I am still trying to take every system there is, and I know that is disaster, and is a hard habit to break. Can you win destroying everything as you go?
4. I'm still unclear about the AI settings. Does 1 every 5 minutes mean 1 new ship every 5 minutes?
This game creates so many questions as to WHAT you should do, and sometimes gets pretty overwhelming (small mind) I know. 
Thanks for the help guys.
Rather than answering your questions directly, I think I could help you more simply by outlining a pretty solid strategy my friends and I have found, that is fairly easy to execute, and is more or less foolproof in most situations.
The strategy is called the Economic Turtle/Path of Destruction build. The Economic Turtle part comes first because you spend the first few hours of the game securing a safe "foothold" on the galaxy which your economic growth and success will stem from for the rest of the game. The Path of Destruction part is simply making a beeline towards the enemy Homeworld (one at a time), destroying every planet on the way and obtaining the knowledge therein, but making no effort to secure the planet past a throwaway orbital command that usually gets destroyed sooner or later (it stays undefended).
The Economic Turtle part is relatively simple to explain. You start the game and scout in a fairly large arc around your home planet(s) (this usually requires MKII scouts). Once you have a good idea of what is in your general area, you decide which planets are the most valuable to have (Factory MKIVs are typically the most valuable), and then make a plan that will capture them, and simultaneously make a set of chokepoints around your "base". I have attached 2 screenshots. The red circles in the first screenshot indicate where we decided to make our chokepoints on which the AI would constantly attack us, to no avail. The purple circles indicate "economic" planets, which are defended by the 4 chokepoints, and have no defenses whatsoever. For clarity, our colors are pink and orange, their colors and red and blue.
Once you have a good number of planets (8-12 or so), you typically have plenty of economy for the rest of the game (in fact, with this build I find myself hitting the resource cap all the time), and a safe, "comfortable" location to call home, and launch the rest of your attacks from. These are your "core" planets. These are the only planets that you need to worry about defending and which all your economy and production will come from.
After you have established your chokepoints and economic foothold on the galaxy, the "Path of Destruction" part of the strategy comes in.
The Path of Destruction is simple. Once you find an enemy Homeworld, you simply make a "Path of Destruction" of planets to it, killing every Orbital Command along the way, but making no effort to defend your own Orbital Command after it has been placed. Your military units will stay on each planet only long enough for the Transports to repair and the Science Labs (which you should have about 10 or more for this) to complete their research. You will use your attacking force, with the aid of transports, to make surgical strikes against each enemy target along the way, taking out AI Eyes and Fortresses first (in that order), then taking our their Orbital Command. Make no effort to CLEAR each planet, simply take out the important targets, and let them "come to you". The AI will typically counter-attack once you've destroyed their Command Station, and will exit the wormhole to your most recently capture planet, only to be blown away. The second screenshot I attached outlines with red circles, the path we took to reach their base(s), simply clearing out each planet, taking the knowledge, but making no effort to hold our bases along the way.
The reason the Path of Destruction strategy works so well is this: By taking out every planet along the path to the AI Homeworld, you are obtaining a ton of knowledge along the way, while simultaneously alerting all those planets permanently, but making no effort to keep the "taken" planets. You are effectively forcing the AI to spread their units thin across the galaxy, making a path to the AI homeworld, and vastly increasing your Knowledge points in the process. The only downside to this strategy is the massive amount of AI Progress that you will accumulate in the course of it, but this is more or less nullified by the chokepoints you have (think 300 the movie), which can stop almost any size of attacking force against a planet. In the 3rd screenshot attached, I gave a visual example of what your defenses on each "chokepoint" should look like. Notice that you aren't attempting to put defense on the "enemy wormholes", only to defend your own planets. (Which in this screenshot, the allied wormhole leads to my Homeworld).
Once you reach the planet adjacent to each enemy Homeworld (one at a time of course), I usually find it easiest to "Nuke the Bastards". Because you are so far away from your own production facilities, and because it is difficult to reinforce at such a vast distance from your planets, it makes it much easier to simply "soften up" the AI Homeworld by nuking them, and thus allowing you to more or less take them out in one go. If you don't nuke the planet, chances are you will have to attack the Homeworld 2 or 3 times at least, losing a ton of units in the process, and then having to go through the long and arduous process of reinforcing from halfway across the galaxy, which I can promise you is a pain in the ass. Save yourself some trouble and take the +50 AI progress, it will be worth it in the end. Your "attacking" force will always need consist of "Triangle Ships", "Flagships", Riot Control Starships, and Bomber Starships. (Triangle Ships denote the 3 basic fleet ships in the game, Bombers, Fighters, and Frigates. Flagships denote Flagships, Zenith Starships, and Spires.) A force of these ships (MKIV or better if possible), can handle almost any type of threat, while taking minimal losses in the process (especially if using Transports). You will also need to leave a "garrison" of defending units in your base as well, which for me typically consist of MKII ships and below, since I have found that you only need the two highest "tiers" of ships for attacking purposes (the rest usually get destroyed quickly anyway).
By the way, sooner or later during the course of all this, you will be hit a massive Cross-Planet attack. Regardless of how far you are on your "Path of Destruction" campaign, you will need to bring all your units home and prepare for this. It doesn't matter how staunch your defenses are when you are being hit by 4000+ enemy ships
That's more or less how the strategy goes. There are a few exception and nuances like going out of your way to capture Adv. Research Stations (typically not necessary) or Core Fabricators (sometimes necessary), but these things aren't even a factor on anything below 8 difficulty, if you are doing it correctly. Always remember to keep several Mobile Repair Stations around, either
in the battle, or on the other side of the wormhole so that your force can get back to fighting strength quickly. As usual, save often in case you make any mistakes, and just keep trying until you get it down. I can only guarantee that this strategy works for the base game, as I have no idea of what new things await me in the expansions. However, I'll assume that with some modifications, it could work well in those games too.
If you have any questions let me know, I hope this helps!
