What's the point of this switch?

The help file says;

The -m switch changes the stretch mode quality when the picture is resized.

...but I haven't noticed much of a difference, if any.

Could it be that the amount of the resize that you've tested it on has been insufficient to have it a noticeable difference? Also, your screen resolution will have an effect on the noticability of the quality of the display.

it basically anti-aliases or blurs the picture.. like how ur screen looks if u have a really low resolution

Could it be non-functioning if i don't have the right video card?

Always a possibility as there's no way Khaled could have every possible combination for cpu, ram, video card, sound card, internet connection, etc., etc., etc (ie: anything else that might be related to how mIRC works).

If you could tell us what video card you have, someone else might have the same card, and might be able to test if it's a problem with that card or something else. Please also specify what driver version you're using when specifying the video card, as well as the resolution that you're using.

mobility Radeon X1400
driver version 8.411.0.0
1280x800

Video Hardware isn't going to have any influence... image manipulation is done via software, not hardware.