The higher you go in CPI the less accurate because of the move to speed ratio, so having higher sensitivity in Windows + game is better than having an insanely high CPI.

My understanding is that it works essentially exactly opposite of this.

Lets say you move your mouse an inch from left to right. If you do it with 800DPI setting, the cursor moves less than if you did it at 1600DPI because the higher DPI sensor has a higher resolution, so it sees twice the number of "dots per inch".

The windows setting (which is the same as the in game setting, btw) on the other hand just affects the distance between "dots". Higher sensitivity means a larger distance on the screen between the refresh points --> move the mouse a little, cursor moves a lot, resulting in lower accuracy. Lower sensitivity means a smaller distance --> move the mouse a lot, cursor moves a little, resulting in higher accuracy.

The more interesting thing though is that the in game accuracy of 50, which corresponds to the 6th tick (out of 11) in windows settings, is supposedly the only one at which there is no (or at least very little) acceleration. The ratio of mouse movement to cursor movement is linear, so that if you move your mouse an inch, then regardless of how fast you move it, the cursor always moves the same amount. That makes it more predictable and easier to learn.

In theory that would mean that the optimal sensitivity settings would be setting ingame/windows sensitivity to 50/6th tick, and adjusting the mouse's DPI setting to achieve the preferred sensitivity (provided the mouse isn't doing any acceleration, which some may do). For me that means 800DPI and 50/6th tick. If I wanted to, the mouse could go up to over 3000DPI, but that'd be way too fast for my liking.