The preferred option is in settings->Video. It's operating on the GPU, so it uses almost no resources, since the GPU is optimized for this kind of video operation. The encoder setting option is operating on the CPU, single threaded, so it adds to your CPU usage and it is a performance bottleneck. Don't use it, except if you absolutely must. It has its usage if you want to stream and record at the same time and want the recording resolution different to the streaming resolution.