With the introduction of 1080p HD video support in iTunes last spring, in many cases users now have the choice of two different HD resolutions when purchasing and viewing content from the iTunes Store. While not everything is yet available in the higher, 1080p format, in those cases where it is you may still want to download or use the lower-resolution 720p version to save disk space or play back content on older, lower-performance PCs. iTunes provides two different settings for choosing your preferred video resolution; in your iTunes Preferences on the Playback panel, the “Preferred Video Version” allows you to choose which version to use for playback, subject to the availability of that version in your actual iTunes library. A similar setting on the Store page also allows you to choose whether to prefer a 720p or 1080p version when downloading videos from the iTunes Store.
It’s also worth mentioning that this setting affects which version gets re-downloaded when grabbing past purchases from your iTunes in the Cloud account, so you can actually switch this setting over and re-download a different HD resolution to keep both a 720p and 1080p version in your iTunes library—useful in cases where you may want to use the same content on iOS devices with different HD capabilities.