As mentioned above in that mass of words above 
, WMR is doing the reprojection and SteamVR is just being used to turn the feature on or off, as WMR doesn’t have a ‘per Steam library’ entry to use.
How it works is like this:
(this image isn’t ideal, but I found it and in a rush 
but you can imagine it right to left as how a game is drawn, distorted and then viewed in the HMD)
So the lens is on the left with a physical shape to give a wide field of view, the ‘barrel distortion composition’ redraw is in the middle, and then the nice flat grid that you can imagine a 2D game is drawn in on the right. The reason for the 140% or 100% (or 100% and 50% on the G2) is that you’ll notice the grid pattern in the barrel shape has more area in it in in the centre. Picture a canvas drapped over a barrel I guess.
So what 140% resolution (or 100% on G2, they effectively ‘build in’ the 1.4 ratio this time to confuse everyone) does is ensure the edge of the grid is also getting a 1:1 game pixel to HMD pixel ratios. That means it’s clear in the center and the edges, otherwise the game pixels look stretched as you get further away from the center.
For flight sims we tend to care about the center area more, so we can read everything clearly, so getting the 1:1 for the middle group of squares means 50% (G2) is fine. For people playing room-scale then sometimes the peripheral being more clear as well is good. Of course it’s also just a balance to get a decent framerate vs clarity as well.
SteamVR measures how often your video card doesn’t make the native refresh rate and provides an ‘automatic’ resolution out of the box. It’s not great, as you could play Beat Sabre one day, and it’ll recommend 250% for you on the next time you play DCS, and your PC will turn into an abstract art installation where pictures of planes are drawn once every 2 seconds. ;). It’s better to set the SteamVR resolution either to 100% globally, and then adjust it as a ratio per game, i.e. 100% in ‘General’ setting and then ‘50%’ in the DCS entry, so you’ll get 100% x 50% = 50%. You can also use the Motion Smoothing setting per app that way as well, so handy.
One thing also worth pointing out with anything VR ish is that it’s eyes dependent, so if it works for one person it might not work for another, we all see differently in fovea details and flicker etc. The general tip is ‘get as many pixels in the center you can without destroying framerate’.
Hope that helps.
PS An old (2013!) but still intro good resource is this: http://media.steampowered.com/apps/valve/2013/Team_Fortress_in_VR_GDC.pdf
Extract:
It is certain
My wife needs picture-in-picture apparently. She’d probably be a good Forward Air Controller…able to work multiple frequencies at the same time…