Thank you, but I still don't really understand. Does that mean only 300 lines are updated each frame? Surely that can't be true?
The sets still update at full resolution. However your eyes will perceive it as only 300 lines, so the image will look blurry. It is an optical illusion that has to do with the fact that the eye expects real life moving objects to move smoothly through space. Whereas on a TV, the object is fixed in place for each frame, then jumps in position on the next frame. This causes the eye to perceive lower resolution when attempting to track a moving object.
As I said earlier, there are two methods for defeating this optical problem:
1. Instead of holding the same image on screen for the entire frame, you can flicker it on and off at a faster rate. This is what plasmas and CRTs did. You might remember plasmas being advertised as having a 600 Hz refresh rate - this is what that was talking about. They would flicker the image on and off 600 times a second, regardless of what the frame rate of the source material was. In the case of OLED & LCD, they do not inherently flicker. However they can simulate something similar by refreshing faster than the source material and inserting a black frame in every other refresh. This doesn't require any fancy computations, but because the screen is black half the time, it appears only half as bright to your eye. Incidentally, a number of high-end gaming displays use similar techniques, like Oculus Rift and monitors that support LightBoost.
2. A second option is that instead of inserting black frames, the TV looks at two frames of the source material and computes its own "in-between" frame, then displays that. This is called motion interpolation. Since you aren't using a black frame, the screen is just as bright. However the computation takes time, which introduces latency. And if the TV makes a mistake in predicting what the in-between frame should look like, you will see visual artifacts or judder.
And what does Sony do to improve this? Panel tech is the same, so... frame interpolation? But that will be turned off in Game mode, so I just don't get what it does differently to make games look better in motion.
Sony supports black frame insertion, and LG doesn't. You can use BFI in game mode, because it doesn't introduce any input lag. It does reduce the maximum brightness of the screen, though. However when playing SDR games that may not be a problem. This is one of the big reasons that gamers ought to care about advancements in brightness, even if they already think their TV is bright enough.
Many people also say that Sony's motion interpolation is better than LGs, however for people who care a lot about input latency this doesn't matter, since they will turn off motion interpolation.