Yes that's to adjust the height. The higher the water lvl the more water capacity of your tank. More water, more stable. Some like it lower for asthetics and it can help the return pipe act like a waterfall and break the water surface for more oxygenated water.
You can use flex tubing but just make sure to use the good anti kink ones. Kinks in a sump system can be a nightmare. I haven't used flex tubing in awhile so maybe someone else can help you with that. I use PVC to connect all my plumbing.
Do you use the PVC blue cement to attach it? Is that stuff fish safe?
