Can someone please explain aspect scaling?

I don't really know what it means. Does it make the pixels bigger? does it reduce image quality? WHAT is it exactly?

I just got a Dell 2007fpw 20" and it is very nice.

But when I try and run a game like Titan quest at 1680X1050 it gets a bit choppy on my 9800xt. So when I turned the resolution down in the game to 1280x768 (with aspect scaling on in the ati control panel); the game runs like butter at 30+fps... And I don't see any difference in the image quality other than the minimal stretching from the difference in aspect ratios between 16:10 and 16:9. So what does aspect scaling do to make it fit? is it blowing the image up to the native resolution? or does it acutally change resolutions to 1280X768 and just stretch it a bit to make it fit the aspect ratio?

I know I probably answered my own question in there somewhere, I'm still curious because I always thought lcd's HAD to display images at their native rez (in my case 1680x1050) or the image would somehow be messed up, or the monitor would be damaged or something. :?:

Anway, thanks in advance for any clarification on this!