The first pic is using 1:1 scaling
the second is 4:3 (or “aspect ratio scaling”)
This monitor is 1680x1050, so the 640x480 image looks pretty good scaled up. I also happen to run the text interface on this system at 640x480, and the picture looks perfect - the edges of the text are sharp, and there are no obvious scaling artfacts. My Ultimate 64 also looks great on this system; it also looks fantastic on my 54" 4K TV.
This is not to brag about my great monitor - I'm just saying that modern hardware does a much better job than the ones made just a few years ago.

