From the instruction manual (page 56):
Although the High ISO speed noise reduction settings are applied to the recorded images, the images used for image playback (on the LCD monitor or TV screen) and direct printing [camera attached to printer] are not applied with noise reduction (noise may be noticeable in the images). Confirm the noise reduction effect or print noise- reduced images with Digital Photo Professional.
This form of noise reduction is filtering done by the built-in processor (Digic 4 chip). Fine so far…
- you store the filtered image (thus loosing the original “very raw” image), or
- you store the unfiltered image with a flag instructing post-processing software to do the filtering.
Both are pretty different, especially because not everyone uses Canon’s own DPP post-processing software as supplied with the camera. So the second option is fine (especially when shooting RAW), but seems to be “giving instructions to downstream PC software” rather than “applied to the recorded images” by the camera itself.