How does Plex handle streaming and subtitles?

Many Plex clients are only able to handle subtitles if they are present in a text-based format (SRT, ASS).
Unfortunately, subtitles on DVD and BluRay are only pixel-based (VOBSUB, PGS).
Therefore, as soon as you activate a pixel-based subtitle, Plex server has no choice than to “burn-in” the subtitle into the video picture (which then causes transcoding).
So, if you had a chance to convert the subtitle into the SRT format (or acquire the subtitle in this format), you could prevent transcoding in many situations.

If you only need subtitles occasionally, use a Plex client which is able to Direct Play pixel-based subtitles. There are only 2 of these (AFAIK):
OpenPHT / Rasplex
and PMP