This policy setting allows you to improve performance in low bandwidth scenarios. This setting is incrementally scaled from ...

This policy setting allows you to improve performance in low bandwidth scenarios.

This setting is incrementally scaled from "No optimization" to "Full optimization".  Each incremental setting includes the previous optimization setting.

For example:

"Turn off background" will include the following optimizations:
No full window drag
Turn off background

"Full optimization" will include the following optimizations:
Use 16-bit color (8-bit color in Windows Vista)
Turn off font smoothing(not supported in Windows Vista)
No full window drag
Turn off background

If you enable this policy setting, bandwidth optimization will occur at the level specified.

If you disable this policy setting, application-based settings will be used.

If you do not configure this policy setting, application-based settings will be used.