Why would a 1080p display, look better when set to 1600 x 900p rather than it’s native 1080p?

I’ve been pet setting for my Mom the past week or so, and I brought my PC down with me and hooked it up to her TV (since she ownes a laptop, not a desktop and I didn’t want to bring my monitor down).

Both my monitor at home and her TV are 1920 x 1080p, but my monitor is obviously smaller at 20 some odd inches, while her TV is like 40.”

I expected things to look a little worse on her TV, because of less pixel density. However I underestimated how bad it would be. Things look very bad and also looked washed out. As well as the desktop expanding past the edges of the TV screen.

I turned the resolution to 1600x900 and it looks much better. Not washed out at all and the desktop fits the screen nicely and images look much sharper. (Although obviously not as sharp as 1080p on my monitor)

Why would it look better at a worse resolution than what the screen’s capable of?

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(Side note: 1920 x 1080 is the same aspect ratio as 1600 x 900.)