Hi UM1,
Enabling either of the settings comes down to preference or needs. Both signing and encryption will add extra CPU usage and, in most systems, are not a requirement. For the encryption, "light" will encrypt the headers (more or less) while "strong" will encrypt all of the video. If you do need/want encryption, typically "light" is more than satisfactory. Both of them are done using AES-256 encryption.
"Light" encryption will add a little bit of CPU overhead (the amount varies depending on a lot of factors) but setting it to "strong" could add 10-15% extra CPU overhead...or potentially even more.
If encryption is enabled, users will not know the difference (i.e., they won't have to enter another password when viewing the video). What encryption does is protects you in case someone gets access to your storage location and tries to view the video using our Smart Client Player. If you tried doing that and the video was encrypted, it would prompt you for a password in order to view the video.