From LinuxMCE wiki
LinuxMCE and Extended Display Identification Data (EDID)
Consumer A/V gear, like DVDs, cable boxes and TVs, handle video differently than PCs and PC monitors. PCs and PC monitors exchange information about the resolution and capabilities of the monitors using EDID. With EDID, the PC figures out automatically what type of monitor and what type of video connector (VGA, DVI) is used. However, consumer A/V gear generally does not work like this. Instead the output resolution is generally set by a switch. The video signal is then output to all connectors at the same time.
LinuxMCE with TVs
This often leads to frustration when using a home theater PC. When you connect the PC to a TV, the PC usually expects EDID information from the TV. But since most consumer TV's do not report EDID information (or report it improperly), the PC often incorrectly detects the active connector, or outputs the wrong resolution.
Therefore LinuxMCE does not use EDID to communicate to the TV or monitor. Instead, the user must manually specify the connector type and the resolution in the A/V Wizard (unless you are using the default 640 x 480 VGA).
LinuxMCE with PC monitors, plasma displays etc.
The A/V Wizard makes the process a bit more complicated for PC users who may actually be using a PC monitor (instead of a TV) for video output. They are used to having EDID automatically detect and configure their monitor's output connector and resolution. Because EDID is turned off in LinuxMCE, however, these users will also have to manually set the output connector and resolution settings, as above.
Trade-off: disable EDID
We decided that to use a consumer TV with a home theater PC (and still have HD video) it would be simpler to use manual output type/resolution configuration for all video output, no matter whether a TV or a PC monitor is used.
Hiding the complexity of modelines
In the past, most Linux users using a TV as a monitor have determined the correct settings for their TV using a modeline tool. They then manually edit the modeline of the Xfree86 module in Linux. While this only has to be done once for each TV, it takes some effort and tweaking of Linux configuration files. Requiring a user to edit the Xfree86 modeline by hand is likely too complex for many users, so instead, we decided to use a simpler manual configuration method for all video output devices, no matter whether a TV or a PC monitor.
Custom display resolutions
Those with displays with unusual resolutions are most affected by this - however see Custom Display Resolutions for a workaround.