The best place to watch the air show from is Teachbeach which is free, and is about 1km closer to the action than the prime paid seating by Lakeshore Boulevard.
Teachbeach is on West island which you can walk to (unlike Toronto Island which requires a ferry).
Teachbeach / West island is about 1000m further out into the lake than Lakeshore, so the action is almost directly overhead.
We like to swim close to shore while watching the action on the water, from in the water.
Bring your towfloat for safety and to celebrate National Towfloat Day which is today.
Here's some pictures of what Teachbeach is like during the air show, from last year's air show.