The processor never overclocks. It can't go to 600mhz or 1ghz.

Performance: Always at 400mhz
On-demand: Scales between 165mhz and 400mhz
Conservative: Always at 165mhz

Performance mode, AFAIK, was discovered by lcuk when he was making liqbase. The algorithms were so efficient that the tablet would scale down the processor and make the animations jerky. So he found out if you force it to stay at the max, it works a lot better.

Also, I have not found any significant battery savings between the modes, so performance is the best.