Q:

What happens when you display a high resolution image on a low resolution screen?

For a non-computer graphics expert, what happens technically when you do this? Are multiple pixels merged to one to compensate for the lower resolution? And in how far will this affect the image quality?
Would a high resolution image look sharper on a low resolution display than if the same image would have the exact same resolution as the screen?

A:

If you scale an image down to a screen that has a lower resolution than yout image, you have to descide what you do, there is no single way of doing this.
There are many different techniques that yield very different results.
This is very similar to displaying a low resolution image on a high resolution display where do the inverse thing by desciding how to fill the "more" pixels on the screen. There are also many techniques for doing this.

The image shows two upscaling-techniques and shows how different the results can look if different techniques are used. (A nearest-neighbor scaling on the left and a 2*Sal on the right.) Imagine that there are also such differences if you downscale an image.
You can find a nice overview on different scaling techniques on the wikipedia page for Image scaling.

