Electrical Grid
Phase Alternating Line, or PAL, is the video format found in Europe, Australia and Asia, where electricity operates on a 50 hertz grid. The National Television Standards Committee, or NTSC, format is used in the United States, where the electricity grid is 60 hertz.
Rendering
NTSC video on your Xbox 360 appears at alternating spurts of 30 frames per second, which happens so fast it's undetectable. The PAL format renders at 25 fps, which impacts video quality. If your device is set to PAL and you try to play an NTSC video, you need to remove 5 fps and end up with black letterboxing. Playing a PAL video on an NTSC device creates blurriness and lines because PAL lacks the additional 5 fps.
Quality
Quality varies between PAL and NTSC. Even though NTSC has more frames per second, PAL has 625 lines of resolution, as opposed to 525 with NTSC. PAL displays a better picture quality and resolution with the additional lines.
Color Signals
Since PAL was developed after the introduction of color signals, the format uses better technology to display clarity and accurately display color signals to the viewer. NTSC, first adopted in 1941, does not have ideal electronic signals for color.
Compatibility Mode
A game released for the Xbox 360 in PAL format will not work on a device designed for NTSC, and a game released in NTSC format will not play on a PAL system.