Whats the difference between enabling 165hz vs setting a custom resolution in windows?

Hi.

I just tested the black levels on lg g5 55" using the 165 hz mode and it is indeed bad. When I set a custom resolution however, for lets say 4k 160hz and disable 165hz mode, then the black levels are okay.

Both modes would work with some sort of signal compression as far as I know, but given that this is such a simple fix, would there be any drawbacks to using 160 hz this way?