deergomoo is correct, Apple’s “Retina” displays work by displaying all screen elements using images/icons/text rendered at 2x the liner number of pixels as their non-retina counterparts. Since it’s a fixed 2x scaling, the only way to have anything other than the native panel resolution (with elements that are 2x their non-retina number of linear pixels) is to render at a frame buffer size larger than the actual screen. Then this frame buffer is scaled (by the GPU) to fit the actual screen size. Because it’s usually scaling down and not up this theoretically results in only very minor blurring that most people don’t notice.

It used to be this non-native scaling was only an option and by default the MacBooks ran at the exact native panel resolution. But at some point that changed so the default is one “notch” on the “more space” slider. I presume most people preferred it that way as you don’t get a lot of text on the screen at the native “Retina” resolution. But the sharpness is worse than when running unscaled.