difference between MPEG2 hardware and software encoding?

Answer 1

The difference is that one is depending on hardware that is specifically designed to decode/encode MPEG2 movies. Software encoding is using raw CPU power to decode/encode an MPEG movie.

If you can, always go for the hardware encoding. It is faster and it puts less stress on your system. These days with nearly 4GHz of processing power and dual/quad CPU power, hardware is not as fast as it use to be though.

Decoding would be used when you are watching a movie. Encoding is when you make or create a movie.