response i got from lg: "The power save option is for the display brightness, off will always display at maximum brightness, always on will adjust the screen at all times and night only will only adjust the screen at night."
There is another setting in the phone for dimming/turning off the backlight after a certain amount of time. I've also read that on some phones (e.g. nokia) the power save setting puts the phone into "flight mode" when it cant find a signal for a cert...