This is where I should tell you that each video card manufacturer handles these differently. ATI gives you basic controls, and while NVIDIA adds one feature, it is somewhat redundant.

ATI allows you to center the image on the monitor, or stretch it to fill the screen. There is no selection for fixed aspect-ratio stretching.

NVIDIA has a few more options - you can display the small resolution image in the center of your screen, or have it stretched to fill the screen, just like ATI. NVIDIA also has an option that will stretch the image to fit the maximum height of the display, but in a fixed aspect ratio. You can also select "Monitor Scaling" which will let the monitor do the work. This is exactly the same as selecting "Centered Output" in either driver.

Monitors may scale an image differently, so it's up to you to decide whether you want the monitor to handle scaling, or the drivers. On my Dell 2005FPW, the monitor's scaling looks exactly the same as both ATI and NVIDIA's scaling. At least, to my eyes.

This is what Dell's monitor control menu looks like:

As you can see, the monitor supports 1:1 (centered display), Fill (stretched to fit entire screen) and Aspect (fixed aspect ratio, stretched to fit full height of monitor). How monitors handle this will differ, however. If you don't have the same selections, you can just use the drivers to handle the output.

So what does scaling do for you? Let's find out!