When an IFR GPS is hooked up to a nav head via either the ARINC-429 or analog connections (which the HS34 supports), and you're flying an approach, the CDI's sensitivity gradually increases as you get closer to the airport. This happens in a smoothed, stepwise fashion, automatically as you transition between enroute, approach, and terminal distances from the airport.
In contrast, NMEA data is not really designed to be the data source that drives a nav head. It provides course and cross track error, which is enough to draw an HSI, but isn't enough to provide the auto-scaling CDI needles as described above (and in your GPS's users manual). You CAN toggle between enroute, approach, and terminal sensitivities manually on the Dynon when using a GPS without the HS34, but the question ends up being - do you really want any more workload items when you're flying a real IFR approach?
Our general reccomendation is - if you're planning on using your IFR GPS in actually IFR situations, and want the book-specified behavior from your CDI indicator, you probably want to interface that GPS through the HS34 (or use an external nav head). If you're using your Dynon HSI informational purposes only in a non-IFR environment, the ARINC-429 and analog interfaces may not be as important to you.
