NeatVideo is the program we use to reduce visible film grain and minor-moderate scratches. It helps suppress visual noise and makes for a cleaner looking transfer. However, it does blur the details of the image a bit.
While transfers processed through NeatVideo do look cleaner and softer, we sometimes prefer the unprocessed, more grainy (and scratched) look, for it gives more detail of the original footage. We especially notice that detail in the facial features, clothes, etc. So keep in mind that outlines and details will be somewhat softened by NeatVideo.
The NeatVideo process is best performed as the very final step -- just before encoding to a DVD or Blu-ray (BD.) This extra step takes time.
Watch these images change as grain reduction (NeatVideo) is applied and then -- not applied. You'll notice visible grain and scratches and then they'll disappear. (All the images can be further enlarged just by clicking on them.)
Image courtesy of Patrick Joy (Fort Bragg - 1966)
Below are sections of the above image, so you can see how grain reduction improves the image (reducing scratches and dirt specs.)
It removes grain and some dirt -- but not all dirt.
Smooths out skin, but has tendency to distort some.