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Benefits of Overclocking the Processor
There's only one benefit to overclocking the processor, but it's a big one: you increase the speed of the processor, one of the most important devices in the PC for performance purposes. However, you must qualify this in modern PCs by realizing that the processor is only one factor in overall system performance. Even though 333 is 25% larger than 266, a Pentium II 333 system is definitely not 25% faster than a Pentium II 266 system for almost every task. The reason is that the processor is running much faster than the rest of the PC even at 266 MHz, so much of the extra speed of the 333 is wasted waiting for the memory or other components. This is explained in detail here.
Also you must realize that small improvements in performance are not noticeable to the average person. A speed increase of 8% may show up in your benchmarks, but it's not going to have any real-world effect on anyone other than someone doing serious, hours-long number crunching (and this sort of person can't afford the risks inherent in overclocking anyway). Most users cannot perceive any practical "feels faster" difference between 166 and 200 MHz processors of the same type, for example.