The settings in the Visual enhancements entry use human perception patterns to achieve better overall quality.    
This means, for example, that the quality is better in the middle of the picture than at the outer edges because the eyes tend to focus on the middle and do not notice slight blurring at the edge. Because quality is “saved” at the edge, you can either improve overall quality or achieve greater compression. This means that you can achieve greater compression without any appreciable loss of quality.
The following check boxes are available in the Psychovisual enhancement area:   
Picture level
If this check box is selected, human perception is taken into account in order to achieve better compression for individual pictures at certain spots in the video.
Macroblock level
If this check box is selected, human perception is taken into account in order to achieve better compression for macroblocks in certain areas in the picture.
 
See also
Encoder Settings


Visual Enhancements