My monitor's resolution is 1600*900. On YouTube, we have 1080 (1920*1080) and 720(1280*720). So my monitor's resolution is higher than 720 and lower than 1080. Now What quality of video am I watching?
The resolution shown is the resolution the video plays at. Your computer will upscale or downscale the video to fit the window... You could select 144p and full screen and it would play a 144p video scaled to 1600x900... or you could select 1080p HD and it would play a 1080p video scaled to 1600x900...
Whether or not the video quality is any good depends on what mix of hardware and software is used for scaling/encoding/decoding. Youtube and many streaming services are typically not the best for theoretical video quality due to the use of compression to reduce data usage to reasonable levels.
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