For the record, when running an LCD at a resolution lower than its native resolution, you generally have 2 (or 3 if the LCD is a widescreen) options.
The first is to display the image where one LCD pixel equals one pixel being sent from the computer. So if you have a 1280x1024 native LCD, and you view a 640x480 pixel image at 100% zoom, the actual size of that image in inches or cm will be identical to the size the display would be if you ran it at 640x480 without it being stretched to fill the screen.
The second option is to have the LCD automatically stretch any undersized picture to fill the screen. This will look about as good (or as bad, depending on how picky you are) as taking a 640x480 image in Photoshop and resizing it to 1280x1024. Pixels are generated out of thin air (interpolated from existing pixels, actually), and the result often looks blurry and indistinct. Unacceptable on the desktop, but usually quite bearable in gaming.
The third option, which is generally only relevant for widescreen displays, maintains the aspect ratio of the image while stretching it to the first edges of the screen it encounters. So instead of a 4:3 ratio image being shown stretched to the sides when full-screen on a 16:10 ratio monitor, it'll be shown as 4:3, with black bars running on the sides to "fill" up the rest of the space.
