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It lowers the temperature of the SOC allowing the CPU and GPU to run for longer periods without throttling. Meaning that you will have more consistent frames and low 1%.
I was just about to ask how undervolting could possibly improve performance. Your explanation sounds pretty plausible.
Lower temps and less power draw, which means you reach the thermal and power limit later.
It lowers the temperature of the SOC allowing the CPU and GPU to run for longer periods without throttling. Meaning that you will have more consistent frames and low 1%.