1) Why would I run at 1600x1024 rather than 1440x968? Is there really a difference that I can see?
2) Are the fonts any bigger at lower resolution?
3) Can you change the size of fonts? I'd love them bigger!
4) does my desktop resolution matter?

oops a lot more than one question!
Thanks for any input!

1. Why would you? Depends on your native resolution really, what screen you are playing on?
2. Yes.
3. No, but font size changes are planned in the next patch, coming in a couple days.
4. Everything on your screen looks best in native resolution. Set it any lower and the picture gets pixelated.

The main reason is at 1600 I get 40 fps and 60 at 1440 (and I really don't see that much difference)

The 1600 was optimized setting from nvidia
native is 1920 x1080 and I am playing on a 24" moniter

Using your monitor's native resolution optimizes Witcher 3's performance. The smaller it is the faster the game runs.

This is specially helpful for machines below or meet the minimum requirements.

This game performance is very strongly influenced by the resolution you set in game.

I would like to run at a lower resolution than my native monitor resolution (1920x1200), but both the GPU and monitor don't hand scaling very well.

In your case your display resolution is 1920x1080. Running at this resolution with give you the sharpest image, but of course the performance suffers quite a bit.

If you were to run at a lower resolution, you want to choose a resolution that matches your display aspect ratio (Width:Height ratio which is 16:9). There is a partial solution: you can run at 1440x1080 (4:3 ratio) and disable scaling. You will have vertical black bands on either side of your display, but your image quality wont suffer.

Resolutions that maintain 16:9 aspect ratio:
1600x900 (There are more pixels than 1440x968, so it wont run as fast, but it matches your display better)
1366x768
1280x720

When you stretch the image at these resolutions, everything will be in the correct proportions, but the image sharpness and detail will suffer (Some bright spark needs to invent a quality post processing resolution upscale filter since the GPU upscaling sucks (both Nvidia and AMD)).