Here is some info on Pure Direct vs. Direct Stereo vs. Straight/2ch Stereo
(quotes from Yamaha)
Pure Direct is a special listening mode that provides the highest possible signal purity. It can be used for both analog and digital sources, with two-channel or multi-channel inputs. When it is selected, the signal follows the most direct path and power to the video circuit is shut down. Certain functions are not operational and even the display is turned off, lighting for only a few seconds when a function is used.
Direct Stereo causes the input stereo signal to bypass the DSP circuitry so the pure signal is output without any processing or data loss whatsoever.
Yamaha amplifiers / receivers also offer two other special operation modes for higher quality. Straight outputs the original analog or digital signal without any post-processing. 2-Channel Stereo processes the multichannel signal and outputs it via two channels, for use with a two-speaker system.
A picture attached to show things a bit clearer