<p>The performance of a Direct3D application seems to be significantly better in full screen mode compared to windowed mode. What are the technical reasons behind this?</p>

<p>I guess it has something to do with the fact that a full screen application can gain exclusive control for the display. But why the application cannot gain exclusive control for <em>part</em> of the screen (i.e. window) and have the same performance benefits?</p>

There's
a bit
on MSDN that says full screen mode uses buffer flipping, if set up correctly, as opposed to blitting. It makes sense.
Of course you can (and in a way, do) give exclusive control for part of the screen to an application, but what happens to the rest of the screen? You still have to blit, do occlusion checking, etc. on the rest of the windows, and I think that's what causes the performance hit.