Martin, lets use a projector that has a 720p "native resolution". What that means is that it has 720 pixels(picture elements)counting vertically. To be able to show a complete picture all 720 have to be used. If the source material is 720 then of course there's no problem. If the source material is 480(standard DVDs and standard definition TV)the projector has to mathematically calculate and interpolate extra pixels to fill all the 720. This doesn't increase the resolution to what a "real" 720 input would offer, it just makes the picture complete. So the 720 projector would be "compatible" with a 480 input. It would also be compatible with a 1080 input(the "maximum resolution")and it would in that case have to scale the 1080 pixels down to fit the 720 screen, so it wouldn't have the full resolution possible with the 1080 input.
So, that projector would be "compatible" with 480 and 1080 inputs(in addition to 720, of course)and would be able to process a "maximum resolution" of 1080.
