The hardware acceleration setting determines where the video is decoded
Either on the CPU of the unit (hw accel off), taking processing time away from other functions and slowing the unit down, or on a dedicated video processing unit (normally refered to as a graphics processing unit in the rest of the computer world).
Now the GPU usually will be special enough to do the normal codecs and color schemes and help alot when you turn "hw accel on". But if you scan in some funky new thing that makes the azbox bog down it's nice to be able to let the general purpose CPU take a swing at decoding it since the code required for this funky channel has been written for the Azbox GPU
Hardware acceleration isn't a speeding up of the Azbox.
It's using video processing to a dedicated chip.