This is my understanding.

1. SB will connect directly to source if it can be played natively 
i.e. MP3, WMA and OGG.  The test for this is to start playing a station
and then stop slimserver the display will go blank but stream will keep
playing. 

2.Slimserver can still proxy for MP3 (as in pre 6.5.x) if it is set in
Player settings (I think).

3. Other formats can be proxied by disabling "built-in" in Server
Setting/Filetype and forcing transcoding.

4. Non native format - the stream from the radio always terminated in
Slimservers which transcodes and then sends transcoding stream to SB.

I'm not sure what happens when SBs are synchronised and paying a radio
stream - I think SS must proxy but I don't know if it transcodes.


-- 
bpa
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