Okay, so I should have added a few things but it still stands that it's not degrading source image quality. It's (set dependant) turning off TV post processing.
Cinema mode on TVs/monitors does almost the same thing. They are there to turn off post-processing effects that can introduce artifacting that the original source doesn't have.
Cinema mode is more for the artifacting while game mode is meant to (almost) nullify input lag.

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