Understanding the state of the muddy seabed is critical to sediment transport, hydrodynamic dissipation and seabed properties. However, this endeavor is challenging because the availability and settling velocity of sediment in muddy environments are highly variable. For a given Reynolds number, typical of fine sediment settling in a moderately energetic muddy shelf, recent 3D numerical simulations have revealed four distinct regimes of wave-induced fine sediment transport. These regimes depend on the availability (or concentration) of sediment and range from well-mixed condition to the formation of lutocline, and eventually a complete flow laminarization. By keeping the sediment availability unchanged, this study further demonstrates the existence of these flow regimes for a range of sediment settling velocities. Simulation results suggest that when settling velocity is larger, the location of the lutocline becomes lower (closer to the bed) and the flow eventually laminarizes when there is further increase in the settling velocity. Hence, the dynamics of lutocline is clearly related to the transition between these flow regimes. The vertical flow structure in the presence of lutocline is revealed through the budgets of sediment flux and turbulent kinetic energy. The suppressed mixing in the lutocline layer is further illustrated from a new perspective, i.e., the budgets of turbulent suspension and concentration fluctuation variance. The concept of saturation, commonly used for tidal boundary layer, is extended here for wave boundary layer.