Default (Black Only)
This method is recommended if you have a very good, strong black ink in your printer and if you also have a gray ink (light black) that prevents dithering from the black ink in light areas. In this case the black generation will be black only.
This method is recommended if a combination of inks is better than your pure black ink only, and if you also have a gray ink (=light black) in the printer to prevent dithering from the black in light areas. Here, the black generation will add the defined values of the additional inks to improve the overall darkness of the result. You can use the "Print.." button to determine whether a combination of colors including black is better than the black ink only.
Gray Component Replacement (GCR)
This method is recommended if a combination of inks is better than your pure black ink and if you don't have a gray ink (=light black) in your printer. With this method CW8 will replace light areas of black with a combination of CMY inks, to visually minimize the dithering from the black ink. Be aware that such a GCR can be critical since the light fastness of C, M and Y are not always the same and that after a certain time one of the inks might fade faster than others resulting in a non-neutral behavior of gray areas (e.g. outdoor flag printing).