From the XMPLAY.TXT file...
Interpolation switch - MOD formats only
"Linear" interpolation "draws" a straight line between the samples,
"Sinc" interpolation "draws" a smooth curve between the samples and
requires more CPU power.
So, basically, interpolation joins the dots
Yes, it improves quality, though some old MODs may sound better without it (as that's how they were created).
