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Hardware acceleration is applicable to limited video formats. If you are not sure what this is, please just go on.
Using regular CPU processing, slower but best quality and most flexible. If you are encoding in formats other than H.264 or MPEG-2, please always choose this.
If your system has Intel Processor Graphics enabled, choose this to boost the transcoding speed for H.264 significantly. You'll need to have Windows 7 or later and have latest Intel graphics driver installed.
If your system has nVidia GeForce display adapter, choose this to utilize CUDA acceleration in H.264 encoding. It's not recommended for use with lower bitrate due to compromised compression quality.