The multi-pass encoding feature will help you encode your video in a high quality. This feature will also make your video a smaller, depending of the video quality, so the video will be faster to upload on the web.
Multi-pass encoding, also known as 2-pass or 3-pass encoding, is a technique for encoding video into another format using multiple passes to keep the best quality.
The video encoder analyzes the video many times from the beginning to the end before the actual encoding process. While scanning the file, the encoder writes information about the original video to its own log file and uses that log to determine the best possible way to fit the video within the bitrate limits user has set for the encoding process
The best way to understand why this is used is to think of a movie -- when there are shots that are totally, absolutely black, like scene changes, normal 1-pass CBR encoding uses the exact same amount of data to that part as it uses for complex action scene. But by using VBR and multi-pass, encoder "knows" that this piece is OK with lower bitrate and that bitrate can be then used for more complex scenes, thus creating better quality for those scenes that require more bitrate.
reference : http://www.afterdawn.com/glossary/term.cfm/multipass
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