In general, when displaying application running in lower native resolutions, modern gfx cards with modern driveres "scale" the image. Scaling means that the image is stretched and interpolated to be displayable in higher resolution. Modern drivers offer 3 options how to present such image
1) No scaling - the image is left in the original resolution without stretching, and is displayed in a smaller "window" in the center of the screen, with borders being black. This has the advantage of the clarity of the image preserverd (it's 1:1, one original pixel equals one physical pixel on your display, so the image is crisp). The disadvantage is obviously smaller image.
2) Full screen scaling - The original image is stretched and interpolated, so that all the monitor is utilized. The advantage is largest possible image, the disadvantage is distortion of the image if the original aspect ratio was different, and blurred image.
3)Aspect ratio scaling - The image is streched, but the original aspect ratio is preserved, so that the image is not distorted (the proportions of objects are preserved), but the image will be slightly blurred because 1 original pixel is streched over multiple physical pixels of your display, and the image is interpolated. This is often a very good compromise. If the original aspect ratio was different, the image will have horizontal of vertical black bars at the edges.
So which option to chose? If the original size and aspect ratio are similar to your display native resolution, option 1 is often the best, because the image clarity offsets a slightly smaller image. If the original resolution is way smaller, 1 is no longer practical, so 3 becomes a better option. 2 is almost never the best option, unless the black bars really bother you.
If your native screen resolution is 1366x768, and the original resolution was 1024x768, then both 1) and 3) should produce the same result - a pixel-perfect image in the middle of the screen, with black bars on the left and right edge. It's preferable to stretching the image which will make text hard to read.