calpoon, the image on the monitor is created with a lot of little dots illuminating with different colors. do you remember old display panles? They were like that:
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The "dots" (or even lamps in that case) were so big, that you could even count them. But the image was shitty and schematic. With technical progress that "dots" has become so small, that you can't notice each and every of them, you just see the resulting picture as if it was printed on the paper.
So, 1024x768 means that there are 1024 dots (pixels) horizontally and 768 vertically in your screen.