Videos always remain in the original format in Schedule. That means Schedule is doing live transcoding to the desired output format.
For example, if your desired output format is 720p50 (H.264, CBR, 3.5 MBit Data Rate Video, AAC Audio 160 KBit/RTMP container), Schedule transcodes the required footage from the current playlist element in realtime to the desired output format. Original footage remains untouched.
The advantage is that you can instantly switch your Schedule to another destination that may need to use another resolution and framerate, like 1080p25 — enabling you to do this without the need to re-transcode all your videos.