andyfilms Or is is just line skipping for faster FPS?
No, it is not skipping any data. It is simply doing the binning in the firmware of the camera. But it is reducing the bit depth of the data if you had set the transfer to 8 bits.
But (there is always a but :-) if you are using 8 bits, you can notice a difference between "hardware" and "software" binning. After summing the 8 bit data in the camera formware to form a 10 bit number with 2xBin, the sum from hardware binning is truncated back to 8 bits before the data is sent to the computer.
If you bin after the data has reached the computer, you can potentially have 2 more bits of dynamic range. But you are also transferring 4 times more data (for 2xBin), and thus have worse FPS. The FPS does not need to be worse, but for today, the transfer speed is limited by ZWO's USB implementation. However, this also assumes that your software is keeping at least 10 bits of data.
As far as SNR, software and hardware binning should be the same if the noise is over the LSB of the 8 bits. If not, software binning (and not reducing the result back to 8 bits) should have better SNR (less quantization noise).
It all boils down to what you want to do with the data. If you are collecting hundreds of data frames and stacking them, I doubt you will see a difference between "software" and "hardware" binning. If you are using data from just a single frame, then "software" binning can be better,
Chen