"No mgi" tells the system to use mps for voip to voip communication. It requires an oas card in the os7200/os7400.
As you've seen it gives you better speech quality.
Mgi converts non-voip (eg pstn or pri trunks) into voip and vice versa.
Mps passes this straight through via proxy (system is the proxy).
Eg ip handset to sip trunks, ip handset to spnet.
Have a read of these documents
https://drive.google.com/folderview?id=0B5X2HyF56LGuN3gzNUxhQVRrZjg
