It depends. As algofy said, they tend to be a bit better when closer.. but I've seen them yank the bids out and the price falls like 30 ticks in seconds for them to only bid it back up to the same level. Also, I've noticed on the ES during off hours, the algos just keep thousands of contracts there and trail the price on the bid/ask up and down and very few contracts traded.
Studied them for years. What you mean I think is that wich amount are made by bots. But that doesnt mean your orders aren't reflected there.
By fake I meant the number will be 600 and next second it will be 60, even though no trade has been made. It fluctuate widely, before I can come to a conclusion. (Not all times though, but hard to know when I am right/wrong)
Level 2 is very useful as algofy stated. It is one of the key things I look at while trading however I focus on the immediate 4 to 5 levels. In my opinion the flashing of large order size 10 to 15 levels away from price are algos messing with other algos.