First pass does analyze the video for to get best bit rate possible. Second pass does the encoding. So it needs double the time as 1-pass encoding. But quality is better then.
------------------------------------------------------- 2-pass variable bit rate encoding When you encode your video to MPEG-2, complex sections of your video require a high bit rate for the best encoding results, while less complex areas can get by with a much lower bit rate. In 2-pass variable bit rate encoding (sometimes called multi-pass encoding) the encoder makes multiple passes through the project before the actual encoding begins. On each pass, the encoder analyzes the video and writes information about the original video to a log file. This log file provides information that enables Vegas 5 to determine the optimal way to fit the video within the bit rate limits originally set by the user. For example, if during the analysis the encoder identifies a section of the video where very little changes (for instance, several frames of black during a scene change) it encodes that section at a much lower bit rate. This saves precious bandwidth that can then be allocated to sections that require greater detail. This varying bit rate results in higher quality for those complex sections while at the same time not wasting valuable bandwidth on the less complex sections of the video This type of encoding offers the potential of better encoding results, but takes more time than traditional constant bit rate encoding. But then, life’s full of trade offs, isn’t it? To use 2-pass variable bit rate encoding, choose File | Render As to open the Render As dialog. From the Save as type drop-down, choose Main Concept MPEG-2. Click the Custom button and click the Video tab in the Custom Template dialog. Select the Variable bit rate radio button and