Answer:
E.g if the monitors native resolution is 1280x1024 and the computer is set to 800x600, setting the monitor to its native resolution would:
1) make the picture allot sharper and clearer, because the 800x600 image isn't being stretched across the 1280x1024 pixels, and the monitor is optimized to be used at the native resolution.
2) be able to see more on things like Internet explorer, Microsoft office and my documents, because there will be more pixels in use.