I have owned the new Insight for a year now and I think I understand how the sports mode can help reduce the occasional high revs that occur in the engine when the electric battery pack is low.
The sports mode keeps the battery pack at least half full to full so your car has the power to handle passing, and smoothly get up steep hills and mountains.
In the economy mode the battery is … often low and causes the engine to rev up a lot to get up the steep hills, or to pass a vehicle in the fast lane.
I recommend using the sports mode in mountainous areas and the economy mode in flat areas.