Render scaling causes the 3d scene rendering to happen at a lower resolution than the screen resolution. At the end of rendering, it’s scaled up to full screen resolution and composited with any additional screen-resolution overlays like the external view HUD, tooltips, menu, etc.
The value you select (eg “80%” or “50%”) is the percentage scaling applied the width and height. This means if you do 50% scaling on a 3840x2160 resolution screen, the 3d scene will be rendered at 1920x1080 (50% of each dimension), for a total of 25% as many pixels (50% on each side, thus 0.5 * 0.5 = 0.25). Rendering fewer pixels reduces the amount of GPU work for the GPU to do, and if and only if you are GPU-limited, it may result in higher frame rates than leaving it set at 100% while using full resolution.
The difference from using 100% render scaling at a lower resolution is that the upscaling is higher quality, and that non-3d portions of the user interface such as menus, tooltips, and the external view HUD are sharper.
I’m not very familiar with VR, but the exact same considerations apply as far as I know.