V-Sync is only used to prevent tearing on CRT's. It does not apply to LCD's, it will only result in lower FPS.
If you are on a CRT, and you are experiencing tearing, you can enable V-sync.
The refresh rate of a CRT does not have anything to do with FPS. If your computer is generating 200 FPS, but your monitor is running at 100 Hz, then it will drop 50% of the frames. You will not notice this.
Higher FPS means the game will run smoother (that's why people want higher FPS), regardless of how many you can actually see. Unless your monitor is running at an extremely low refresh rate, like 40-50 or lower.
If you are playing a detailed 3D game on a slow computer, and you are only getting 25 FPS, then it won't be smooth. It will be choppy.
If it wouldn't "lag", but still only display 25 FPS, then it would be relatively smooth (like a movie).
Frame rates always go up and down. With frame rates of 30-50 it may be choppy in some games, but not in others.
Imagine a 3D game with a square room with 4 blue walls, you can move around at 40 fps and it may feel smooth. If you are playing a game with many different textures and effects at 40fps, it will "lag" at some points (eg grenade explosion), so it will not be smooth. If you are getting 200 FPS the frame rate may still drop to below 100 with certain effects, but it will be too high to cause noticable choppy-ness.
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