This warning means your device does not support hardware decoding. Hardware decoding means that your computer's hardware has a chip in it made specifically for streaming video, which Parsec takes advantage of for a lower latency stream. If you don't have this chip in your GPU, Parsec will use software mode, which is a slower method that uses the CPU instead.
How can I check if my device has a hardware decoder?
Check if your computer's CPU and GPU are listed under the recommended section of the client hardware requirements article.
What can I do if my hardware isn't supported?
Your stream will still work, but it may be slow if the host's display is set to a high enough resolution or FPS. If things feel slow, lower the host's display resolution and FPS. You may need to go as low as 1280x720 at 60 or 30fps. If you're using a laptop, keep the power adapter plugged in as software decoding is very performance intensive.
My AMD GPU listed under recommended still uses software
You need to change to AMD Crimson drivers, there should be a beta version available for older AMD graphics cards which you can find in the AMD support page. You should also change the host's resolution (the computer you're connecting to) to 1280x720 as older AMD hardware decoders are not able to process higher resolutions fast enough.