The older ones produced square waves, and caused motors to run hot, especially at low speeds. Newer ones with power FET's or IGBT's can produce PWM waveforms to accurately create an apparent sine-wave current in the motor windings, allowing the motor to run essentially as cool as with normal line power.
A number of these units can also be operated from a single-phase line, thereby providing the conversion from single- to 3-phase, as well as the variable speed function, in one unit.