It doesn’t, directly. In your graphics settings, you tell the computer what size signal (pixels) to output. Most monitors will tell the computer what their native (physical) resolution is but you can happily send the monitor a different resolution signal. Depending on the monitor it may interpolate on the fly or just not show anything or show a distorted picture.
When you set a program to “full screen” the computer just expands it to use all the pixels you told it are available.
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