Also as I said any codecs installed affects final output. If you will have e.g. FFDSHOW codec, the output will be affected by its settings (enabled subtitles, incorrect colour depth/aspect ratio, etc.)
Who knows what he/she is doing, it should not be problem but for majority it can lead to not working PMS(missing codecs) or poor final quality.
Process is similar as in these examples:MEncoder takes what ends on the right side so everything between can affect final quality(in good or bad manner )MEncoder itself works out of the box without any codecs installed so no complains of missing audio or video codecs or incorrect settings.EDIT: Sorry for OT