Odee, what do you mean by having system resolution as 1024? I hope it's not inherited from the HP-w22 since the image proportions are different. The ViewSonic is a fullHD wide screen monitor @ 1920x1080 whereas the HP is natively 1680x1050. Dropping your resolution may cause anomalies since there's no way to split single pixels. Agreed, it makes things bigger on your screen. However, if you think the resolution as light bulbs, you can't light a fraction of a bulb. Same with pixels, so if you change your resolution to other than 1:1 ratio you'd be trying to see fractions of pixels, or partially lit light bulbs. Since they're either on or off, 0.5 is the threshold or divider telling how to draw those pixels. In a way it acts similarly to anti-aliasing, showing one pixel as is and another right beside it as a blend of the line and the surrounding colour.
On modern screens the pixel size can be so small that blurring diagonal lines no longer serves its purpose and as Fugi said, it can even make things vanish into the background.
@Coogan, Anti-aliasing isn't a feature of the game, it's a gimmick provided by the video card to fool your eyes. Instead of making you see things better it blurs them to make the overall image look better. Just as a few drinks makes women look prettier.