The quality is SD as it is when watched on PC which is one of the reasons I cancelled it - Netflix doesn't doesn't have this restriction.
From Amazon: "HD movie playback is limited to Kindle Fire HD, Xbox 360, PS3, Roku, TIVO, or other Amazon Instant Video HD compatible devices."
Mobile HD compatible devices = Kindle HD and Apple products only
http://www.amazon.com/gp/video/ontv/devices