Use QuickDraw graphics if you have special graphics hardware. Try both settings and use the fastest.
Direct graphics means that some (not all) graphic operations are written directly to the screen address. This can be very fast on some machines.
In Galaxus 1.0.5 the graphics routines are 100% rewritten for a faster game play on slow machines. If you use a 68040 change to direct graphics - it's up to 30% faster!
Also on a PowerMac you may see drastic differences.