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Enabling this preference in developer options offloads task of rendering window components like buttons, text and complex 2d graphics calculations to GPU. This often results in much faster UI rendering including animations.
On one side you will definitely achieve better frame rate (and hence smooth experience) throughout system, but you may end up using more battery. On certain devices, GPU consumes more power the CPU, hence you may observe 5-15% lower battery life with option enabled.
I would recommend having this option enabled on devices with weaker CPUs e.g. You should seldom need to enable this on dual-core 1.4ghz ARM CPU.
offloading UI rendering to GPU has obvious benefits so that CPU can work on other important tasks like database IO, data manipulation, layout calculations and responding to other user inputs.
... hardware overlay allows the renderer to take a couple of regions aside and treat them optimized. then theres the cpu and gpu. usually android decides which abstraction is best for each view, taking things like transparency into account and what not. you switch hw overlays off, project butter goes out of the window but cpu and gpu still do the job. you force gpu, the composition will be done by your gfx chip. just don't touch it - its meant for developers picking up debugging output.
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