Ok, I admit I'm a little rusty at explaining this, but I want to give it a shot. You essentially get two different kinds of system behavior when you use IM volume controls vs Resistive Protection Speaker Selectors (like those made by Niles).

Let's look at resistive Speaker Selectors first. Here's how they work:

The speakers are wired to switches that alllow all speakers to be connected in parallel to the amplifier. So, if 4 pairs of 8 ohm speakers are connected in parallel, the load the amplifier sees is 2 ohms, unacceptably low (generally, so low that the amplifier will fail quickly). To protect against this, the installer engages a resistor using a switch the client never sees on the rear of the selector. The resistor has a value of about 2.5 ohms (4 room selector) or 3 ohms (6 room selector). It is inserted in SERIES with the speakers. Thus the amplifier sees a much more comfortable and safe load of at least 4 ohms.

Here's a speaker selector in use. When all the rooms are playing, approximately half the amplifiers power is completely wasted as heat, so you see a reduction in the loudest level the speakers can play. However, the magic of sound reproduction is that the loss is only 3 decibels. That's not a very large difference in volume! The human ear perceives that the volume is reduced by half when you lower the level by 10 decibels.

The magic of the speaker selector is that when only one room is playing, although the resistor is still in series, the loss of power is almost undetectable since 80% of the power is distributed to the 8 ohm speaker, only 20% of the power is wasted as heat. A 20% reduction in wattage reduces the actual volume of the speaker by less than one decibel, typically undetectable to the human ear.

Now, what happens with IM volume controls. As Ernie and Fred have said, the IM volume control is set to the 8x setting. Now, each speaker has a 64 ohm impedance. Even if eight pairs of speakers are connected in parallel, the amplifier is completely happy, it sees an 8 ohm load. If the amplifier is 100 watts at 8 ohms each speaker gets an eighth of that, so about a 10 decibel loss in volume. The system appears to play half as loud as the speaker selector system.

Mixing the two systems is actually fairly common. It kind of covers all the bases.

The biggest disadvantage of the speaker selector alone is that you cannot add any more rooms later. If you purchase a 6 pair selector and later decide you want a pair of speakers in the new gazebo area in a side yard, you can't add the speakers without replacing the speaker selector. With IM volume controls you can add speakers and rooms almost ad infinitum...

Another disadvantage of the speaker selector system is that it optimizes the load to 4 ohms. That's fine for a good outboard amplifier, but many of the 2nd Zone amplifiers built in to AVRs won't be happy with 4 ohms and might shut down or even prematurely fail (taking the home theater out with the multi room system). IM volume controls make a cheap amplifier (like those built in to a $1000 AVR for the 2nd zone) quite happy when playing 15 pairs of speakers at background levels.

The third disadvantage of the speaker selector is touted as their advantage. If as Ernie says, you turn off a speaker pair at the switcher, you have to walk all the way back to the switcher to turn it back on. For this reason, many installers hide the switcher from their clients and instruct them to always turn off a room using the volume controls.

The biggest disadvantage of the IM volume controls alone is their effect on loud listening. When a really good song comes on, you just can't crank it as loud as you might like. However, you can certainly play any indoor speakers louder than a vacuum cleaner, which is pretty loud for most people.

The other, less predictable disadvantage of any kind of in wall autoformer volume controls, is their effect on the sonic quality of a pair of expensive (over $1000) speakers. Although a speaker selector uses resistors to achieve impedance protection (which really cannot affect the sound quality of an expensive set of speakers), autoformer volume controls literally put a reactive coil in parallel with the speaker to achieve volume reduction. Even though these coils are designed for reasonably flat frequency response, they can have strange effects on some high end speakers, blurring detail, adding harmonics to the bass notes etc. Now, you can get rid of almost all those effects if you simply turn the volume control all they way up and it is set to 1X Impedance Magnification. However, if the control is set to 8x, you are stuck with the sound quality. Not an issue if you have a pair of $500 ceiling speakers, but something to be concerned about if your den has a pair of high end speakers for critical listening...

Hope this helps, and I hope Ernie or the great, famous and incredibly dedicated Fred Harding (he really is!) will comment on anything I misremembered from my days teaching impedance matching....