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It doesn't. If you view a 1920x1080p source on a non-native 1080p display, what you're looking at is a downscaled, interpolated image.

If you check the output (if the monitor has an info display function) it will most likely show up as 1280x720.

HDCP 1920x1200 monitors are the way to go if you want a smaller display with full 1080p output for games and Blu-Ray.