W-what are you talking about?
VLC?
the answer is : no it does not improove quality nor permormance, but you can give it a shot, again I dunno what is the case really...
My Computer
At a glance
Windows 7 Ultimate 64 bit SP1Intel(R) Core(TM) i5-2500K12GB Kingston Hyperx 1600MHzAsus GTS 450
As was mentioned above, what exactly are you talking about?? A particular program option (and what program)? A Windows or driver settings??
Anyway, for sure using "overlay" does allow things like TV windows to be played on any of your multiple monitors, if you have multiple monitors. You're not tied to a hardware limitation of displaying only on primary monitor #1 (which might benefit from hardware acceleration, but is limited to monitor #1). That's one very strong reason for making use of "overlay" in Windows Media Center or other TV apps (e.g. BeyondTV).
My Computer
At a glance
Windows 7 Pro x64 (1), Win7 Pro X64 (2)i5-3350p 3.1Ghz/6MB-cache (1); E8400 3.0Ghz/6...8GB PC3-12800 DDR3 (1); 4GB PC3-10600 DDR3 (2)ATI HD7750 (1), (see TV cards); ATI R7 250 (2)