Nutter bypass is a rewiring of the system to bypass the computer. Making the carb act more like a normal carb with no controls.
That is why most just replace the carb, because the stock one is basically non adjustable and problematic. A new one makes it run better, because you can tune it for your app, and its simpler than having the computer involved.
As for MPG it is probably subjective, these jeeps dont really do all that great in the first place, but I suspect the better MPG is because they are going from a temperamental and malfunctioning carb to a reasonably tuned new carb.