The HTTP specification requires that all the content of a request be ASCII characters.  Some browsers implement this constraint, others do not.  The DataEncodingMode property is there to determine if encoding should be use or not.  If the browser used for the Silverlight application enforces this specification, it will encode the data with the use of Base64, if the property is set to Auto. 

You can force the property not to encode, or to encode all the time.  But if you force it to not encode, and the browser requires it, then the upload will not work.