It's a strange contradiction that the more beautiful cruise ships float into Sydney Harbour, the fewer harbourside restaurants we have to admire them from. The need to redevelop Sydney's Overseas Passenger Terminal to cope with the cruising boom means two more view-worthy restaurants, Ocean Room and Wildfire, will close. Time, then, to re-evaluate our waterside options.

The news isn't all bad, with a wave of newbies washing up around the harbour including Merivale's pumping Papi Chulo on Manly Pier, Cafe del Mar at Cockle Bay and the new Q at the Pullman Quay Grand hotel, right down to the sweet little Anvil Coffee Co on Kirribilli Wharf.

It also behoves us to not take for granted our existing harbourside eateries, hence this sunset stroll along Woolloomooloo Wharf, past Aki's, Criniti's, China Doll and Manta, to Otto. Under a succession of high-profile owners (Maurice Terzini, John Laws, the Fink family) and chefs (Nino Zoccali, James Kidman, Richard Ptacnik) Otto has been dishing up high-level Italian dining to a celebrity-strewn crowd since 2000.

There is no elaborate entrance as such; you just wander in and hope to get noticed. Then, with luck, you will be led back outside to a table with prime water and city skyline aspects on the broad stretch of terrace.

Czech-born Ptacnik deals in some pretty classy produce, with a menu that runs from cured Petuna ocean trout, to spaghetti with Tasmanian lobster, a 300-gram grilled Tajima wagyu scotch fillet, and an Angus reserve eye fillet topped with foie gras and served with truffled mash. The caprino ($20) is utterly delicious; a ruffled ball of creamy Woodside goat's curd drizzled with truffled honey and surrounded by shards of paper-thin Sardinian crispbread. Another perfectly pitched starter is a line-up of finely sliced, spicy, house-cured Calabrese salami ($8), made that little more appealing with the addition of elegantly thin hand-rolled grissini.

The bloke at the next table orders more grissini. No problem. And more after that. Nobody blinks. It's that sort of place.

At $95, the spaghetti all'aragosta is one of those bucket-list dishes that seem purely for greedy arms-dealers. But share it between two and it's a real treat, the 650 grams of Tassie lobster meat sweet, fresh and lightly cooked, tossed though properly al dente pasta with a goodly coating of fruity, rich, tomato sauce studded with cherry tomatoes, silky with basil leaves and warmed with an undercurrent of cognac.

Other good dishes include a mannered composition of char-grilled wagyu tongue ($28), gussied up with a little vegie garden of pickled carrots, artichokes and radish, and crisp-skinned, wild kingfish ($43) that comes with an uplifting tomato consomme spiked with semi-dried tomato, cucumber and fennel.

The night's dessert special makes my head spin. Imagine rich tiramisu gelato spiked with crisp chocolate and coconut tuiles and soft sponge finger biscuits with the stealthy warmth of marsala jelly and you get the idea.

An earthy, spicy 2011 Dappled pinot noir ($74) from Mornington crosses from lobster to wagyu tongue without a blink. The wine list here is very much part of the experience, a lively mix of old and new world labels designed for a cashed-up corporate crowd.

After 14 years, Otto has grown into a busy, buzzy, professional, high-end Italian that works harder than it has to, given the natural attributes of its site. It's good to be reminded how blessed we are, harbourside. No wonder all those cruise ships want to come here.

tdurack@fairfaxmedia.com.au

The low-down

Best bit: Being on the al fresco terrace
Worst bit: Not being on the al fresco terrace
Go-to dish: Spaghetti all'aragosta with 650 grams of Tasmanian lobster, $95 to share

Terry Durack is chief restaurant critic for The Sydney Morning Herald and senior reviewer for the Good Food Guide. This rating is based on the Good Food Guide scoring system.