Sorry for the long delay and earlier vagueness. I forgot about this thread entirely.
LCD monitors use hardware pixel elements where each individual element equates to one on-screen pixel, as opposed to CRT's. On an LCD, the panel's native resolution is that resolution where one LCD display element equates to one on-screen pixel.
Therefore, when an LCD displays an image that is smaller/larger than the actual "native" resolution, it must scale the image to encompass more than one display element per image pixel (vice versa fr larger images). The manner in which the display does this is called "Scaling Ratio".
If this is set to 1:1, the monitor will use one display unit per pixel, resulting in a black border when the image smaller than native screen size. So if a game were to run at a smaller resolution than the monitor's native one, there will be black borders aound the game "screen". For larger images, this will result in the monitor scrolling to previously invisible parts of the image.
At 4:3, the monitor will display images in that aspect ratio, regardless of the monitor's own aspect ratio, leaving black borders at either side on a wide-screen monitor.
At 16:9 or 16:10, (as with 4:3) the monitor will ignore its native aspect ratio. On a non-widescreen monitor will display the image with black borders at top and bottom. Widescreen (16:9/16:10) monitors will display black bars if the selected aspect ratio does not match the native aspect ratio.
When the Scaling Ratio is set to "Fill", the monitor will scale up the image to occupy all available display elements, and the image will occupy the entire screen, regardless of its original size or resolution. This is the default setting on most LCD monitors.
The Scaling Ratio can be changed either through the monitor's own control menu (under Image Settings), or through the graphics driver menu (Change Monitor Scaling, nVidia Control Panel; not sure about ATI, but probably something similar exists). Changes made to the driver menu will override settings made in the monitor menu.
Hope that helps.