HLS from Channels DVR Server does not require transcoding, they just work hand in hand. As you can see in the Quality Options for away from home, you can choose Original Quality. It can send things down in original quality while using HLS, vs a direct stream.
Using HLS provides many benefits, with the main drawback being that it takes about 2 seconds for a stream to start. This is fine for recordings, but tends to be a bit annoying for live tv channel changing.
In the future, this will be an option which provides devices like a Fire Stick the option to have a longer buffer, vs the 10 minutes they get now. It will be up to the person using Channels decide if they want this trade off.
I personally use HLS in original quality remotely from another home all summer long and not only is it great, it provides so many extras that direct streaming can't do. I'm not going to get into all of them right now, but I can't stress enough how mutually exclusive our HSL tech is from transcoding.
NOTE: this is not a change in terms of the "put the buffer on the server" requests. This is just us utilizing our tech in a way that can benefit in other ways.