yes, the 12.1 is named "special purpose and test" and thats not what you have in mind
usually the one with highest number is the newest, when not doing so you might think about why and have a reason
might be depending on you settings and partly it might be the compromise when down or upscaling with hardware, it can't be compared with a good 2pass algorithm, it also might depend on the setting synology uses when transcoding, i never looked what settings are used with video station and if it can be tweaked because i dont use that
afaik there is not much you can tweak in the video station gui, its just a binary switch to have hardware transcoding or not
there will be no difference with 12.1 and 13.3, its always the i915 driver that comes with DSM and video station
if you want to change things look into how video station calls ffmpeg to transcode the video and try to find out how to improve that, its also possible to install a newer version of ffmpeg from external by a 3rd party package