When you use the software arcs functionality in the CAM processor, you are telling altium to generate curves and arcs by approximating them with straight lines. This is useful for ensuring compatibility with older (outdated) CAM software. The latest standards of the gerber X2 format support "hardware arcs" which is a gcode command that tells the machine to interpolate the arc given two points. The specifics of the command I am not super familiar with, but i believe you specify one point, give the interpolation command, then give the second point and the angle to rotate through.
A line in a gerber file is. Move to one point (light off/not exposing), move to another point (light on/exposing).
Software arcs gives you reverse compatibility at the cost of data accuracy and file size, depending on the minimum line length when you approximate curves.
Hardware arcs are a perfect representation of your data.
Hope that helps, and if I was wrong somewhere in there I apologize and someone should correct me.
~Bryan