Windows detects the resolution of the current display and matches it against the width and height specified for each version of the icon image. If Windows determines that there is an exact match between an icon image and the current device, it uses the matching image. Otherwise, it selects the closest match and stretches the image to the proper size.
If an icon-resource file contains more than one image for a particular resolution, Windows uses the icon image that most closely matches the color capabilities of the current display. If no image matches the device capabilities exactly, Windows selects the image that has the greatest number of colors without exceeding the number of display colors. If all images exceed the color capabilities of the current display, Windows uses the icon image with the least number of colors.