It creates surfaces in system memory if True and in video memory if false, it is slower to blit (Draw, StretchDraw) in system memory but it is horribly slow to read from video memory. Pretty much all that DirectDraw really does is blitting, effects like blending, rotating or whatever requires accessing and fiddling with surfaces pixels directly, so you should generally keep surfaces which will be fiddled with in system memory and in video memory otherwise.