Lightly active or active?

MFP does not calculate exercise into its activity level. If you have your tracker and MFP linked, I'd just leave it on lightly active, or even drop to sedentary. That's what I did when I had them together.

I think this is a correct explanation;

The Activity Level factors MFP uses are based on statistics for average people, not athletes or someone bedridden. The higher your BMR, the more cals Activity Level adds. Also, the higher your LBM (lean body mass – how much muscle you have), the higher Activity Level factor you need, to account for more calories burned even when at rest. This is where many lean, reasonably muscular people err, as they don’t compensate for higher muscle mass. If you choose the wrong Activity Level setting, you may be eating too much or too little.

Sedentary: Adds about 250-500 cals/day for most people. Appropriate for: Those who work at a desk job AND are sedentary at home, with light or no exercise and low LBM; Usually NOT appropriate for stay-at-home moms/dads with young children.

Lightly Active: Adds 450-700. Appropriate for: Most people with young children, who are otherwise sedentary; Many who have a desk job but exercise moderately and have a moderate LBM%; Those who stand a lot at work, but don’t really walk around a lot or lift heavy items, etc.

Active: Adds 700-1000. Appropriate for those who have an active job (some nurses, waitresses, laborers, etc) and exercise moderately-frequently, and especially those who have a high LBM%.

Very Active: Adds 950-1400. Appropriate for those who have a very active job (trainers, some laborers, some athletes, some warehouse workers), and exercise frequently and have a high or very high LBM%.

How long have you had it at Lightly Active? What's happening on the scale, and how's your hunger and energy?

I think it's better to start with as much food as you can get away with and only cut down if you're not seeing results. If it's less than what you were eating before, you'll lose (maybe slowly, but maybe that's ok). So you could just log your regular intake - without making any changes to diet - for a few weeks, compare that to your scale, and subtract 10-20% from that intake number.

I think it depends more on how YOU want to track. I set mine at sedentary, but link my Fitbit to it. My fitbit will add in all the calories I have burned. If you are set to active, it will still figue it and add only any additional you may need (if you burned more than "active"). I like being able to see each day what I have actually burned, and if a have a lazy day or 2, my calories are correct. It all works the same, just a personal preference.