how is it achieved and how crucial is it to good audio?
I'm referring to the 'hog' mode as it is sometimes called, which apparently sets aside more resources for coreaudio(?)
current set-up:macbook pro 13" 2.3ghz 4gbram snow leopard 10.6.7 running FLAC and lossy usb output into musical fidelity V-dac...my audio player app at the moment is Audinirvana since it supports exclusive mode.
 
also, OT but: in the past I've used terminal in osx to manipulate sudo renice and prioritize processes for audio...thought it was along the same lines as this post, so...

In hog mode the normal computer sound effects won't be routed to your DAC, so no "ding" from mail being received or other effects coming through over your music.  Other than that difference I'm not sure.