TechBro8615 parent
I'm not certain, but I think it will avoid transcoding for certain "Web-native" formats that your client device can already play. For example, if you download an mp4 then you should be able to watch it on your iPhone without Jellyfin needing to transcode it.
Every file on my server is a raw blu-ray rip using an MKV container. I don't compress or transcode anything myself, everything is a raw rip from MakeMKV. I suppose I could write an ffmpeg batch job to convert them to MP4 if I wanted, but MKV is really convenient since it'll keep all the subtitle and multiple audio tracks within the file instead of a bunch of SRT files floating around.
Also, while a majority of blu-rays are h264, a non-zero number are encoded with VC-1 or Mpeg2, which as far as I'm aware are definitely not "web-native".
I really wish there was just a checkbox that I could click, or a setting in a config file I could change, that would just avoid transcoding and just send the file.
Apparently the overarching goal of Jellyfin is to always be able to "direct play" (no transcoding), but whether or not that's possible depends on each file and the client device. They have a comprehensive table of which formats require transcoding on which devices: https://jellyfin.org/docs/general/clients/codec-support/
Apple TV 4K (129 USD) + Infuse (10 USD/yr) is the perfect player for me. The only con is that it does not support anything atmos other than Dolby Digital Plus, but my setup is 5.1 only, so I don't mind.