its some kind of optical illusion and i already had some ppl asking me this regarding allods; i wondered about it myself too when i was new to this game...
for REALLY sharp edges set "sharpness" to "OFF" (slider to left; 1)
while on the 1st view it might look unsharp, actually it is perfectly sharp then
see this as an reference, the upper one is the real sharp one, it has only 2 colors
the lower part seems sharp but actually is just weirdly altered... contrast playes the eyes a trick... white + black have been mixed in as they are easier to seperate visually
more lecture about this:
https://en.wikipedia.org/wiki/Unsharp_masking
PS:
some ppl dislike antialiasing, setting antialiasing to off also makes the image appear more "sharp" somehow, but its a subjective view - and some ppl dont like the pixelation-effect of a native resolution image... so best is you play around with it and see what is most plasent to your eyes
then there is SSAA which make the picture appear really blurry since its actually rendered at a higher res and then downscaled... but these things are set in the VGA driver and not in the games graphicsmenu anyway