Disclaimer: The following article does only apply for Windows Phone 7.1 devices. Windows Phone 8 should have no constraints regarding playing multi-resolution streams.
I believe everyone who tried to create a video streaming app for Windows Phone, found rather frustrating that the Smooth Streaming Media Element did not support multiple resolutions. If you were using a manifest with variable resolutions on your desktop application, you could certainly be sure that this manifest will not work on your Windows Phone app out of the box. You had to handle the ManifestReady event and then use the RestrickTracks method to play only the tracks that had the same resolution.
However, I never really understood why the Multi-Resolution support was not provided in the Smooth Streaming Media Element Client for Windows Phone.