Its in their own docs:
If you use a lot of applications in the primary and guest OSs at a time, you may lack the CPU resources. The current version of Parallels Desktop presents you the Adaptive Hypervisor technology that helps you to distribute the CPU resources between the primary and guest OS in the most efficient way.
The Adaptive Hypervisor technology automatically allocate the host computer CPU resources between the virtual machine and primary OS applications depending on what application you are working with at the moment. If your virtual machine window is in focus, the priority of this virtual machine processes will be set higher than the priority of the primary OS's processes and as a result more CPU resources will be allocated to the virtual machine. If you switch to the primary OS window - the priority of its working applications will be set higher and the CPU resources will be relocated to the primary OS.
Normally if you had a quad core, you could assign 1 core VM1, 1 core VM2 and 2 cores for Host OS. This setting changes the balancing on the fly as needed. Its a different way of doing things. Neither is better.