The Universal World Owner's Manual

Sea

The primary control for determining how the sea on your world appears is .. *settings → Lanscape → Sea Rendering Mode
This setting controls the general appearance of your sea (whether it is a plain colour or textured, whether it is semi-transparent etc..)

Making Waves

First of all you need to set *settings → Landscape → Sea Rendering mode to one of the modes that indicates wave effects are applied. (5 or 6) Once thats on, the amplitude, wavelength and general behaviour of the sea is controlled using..

*settings → Landscape → Wave Range Mod Wave Height Mod 1 Wave Height Mod 2 These values are combined in magically random mathematical ways to determine where each point in the sea is at any particular time. (For 'magically random mathematical ways' read 'Mit has no idea how his code works' ;] ).

In theory, 'Range mod' controls the wavelength (i.e. a high value creates waves with peaks close together) and the other two are combined to create the height of the waves.

As a starting point, heres some example values that will generate a normal-ish looking sea on the default world setup :
<codedoc> Wave Range Mod = 32 Wave Height Mod 1 = 4717 Wave Height Mod 2 = 3764 </codedoc> Though, because the nature of the waves is affected by your landscape scale, you might find these values produce a different effect on your particular world.

Couple of final 'advanced user' notes..

To help generate waves that don't repeat in too obvious a way, the two height mod values should be 'different' - in the sense of not easily dividing into each other. (One odd number and one even number is a fair start).
Keeping the range mod in the form of a regular 'binary' number is sometimes helpful to avoid the waves acting weirdly. e.g. numbers like 4, 8, 16, 32, 64 tend to work best.