You posted on another thread that your monitor is Philips 190C, so from what I looked up, its a flat panel 19" not wide screen? If so, your resolution should be 1280x1024. This is kinda long, so bear with me...
Scaling is another word for stretching. If your computer has image scaling enabled, then images that are smaller than your screen will stretch to fill the entire screen. The image looks bigger but looses quality because your video card is just pulling at the edges to fill the screen without taking into account what the aspect ratio of the image is. So if you have scaling enabled, when you change your resolution to 1024x768 on a 19" monitor, it should fill the entire screen but looses sharpness because the entire image is stretching to fill what a resolution of 1280x1024 should fill. If you change your resolution to 1280x800, it will also stretch to the edges of the screen, even though it distorts the image by stretching only one side.
If you disable scaling, whenever you run something that has a different resolution than your monitor's native resolution (1280x1024 in your case Stormrage), it will stay in the middle without stretching, instead you will get black bands around the image. So if you want to play something at 800x600 for whatever reason, instead of filling the entire monitor space of 1280x1024 and loosing sharpness, it will stay its original 800x600 size in the center of the screen and you will get black empty space around it. Its good for playing old school games and classic games like Starcraft or Red Alert, where you couldn't change the resolution of the game, and it ran at 800x600 or lower.
To disable it, you have to go to your video card settings. Where the option is depends on what brand of video card you're using. If you have an NVidia card, right click on your desktop and click on "Nvidia Control Panel". If you've never been there before, it will ask you if you want to use standard or advanced view, select standard (or advanced if you want). On the left side there is a menu tree, open the "Display" list, and click on "Change flat panel scaling". Here you can change your options, it even gives you a little preview on the side of what it would look like. You can select "Do not scale" and on the bottom of the screen click Apply.
If you have an ATI card, then I have no idea how to change the settings there, I haven't used an ATI card for over 4 years so I wouldn't know what the ATI control panel would look like. But I would imagine it's the same kind of options you have in the settings, you would find Display Settings/Options, Scaling Options, or Flat Panel Scaling, or something along those lines. And then change it so that the screen does not scale images.