The way "Retina" resolutions work in macOS is that any content that is aware that you're on a Retina display (which is most, nowadays,) will display high-resolution images at "native one-pixel-for-one" resolution. So if you're displaying on a 3840x2160 screen in any "Retina" or "HiDPI" setting, and you put a 4K YouTube video full screen, it will display the full 3840 pixels wide by 2160 pixels tall. Same with photo editing apps - they will display at the one-pixel-for-one native resolution of the screen.
For apps that don't need one-for-one pixel accuracy (like text-based programs, or even the non-one-pixel-for-one sections of apps like Final Cut Pro, web browsers showing the text portion, etc,) it shows at an "effective size" based on your resolution setting (the "looks like",) but actually rendering the screen at higher than your screen's native resolution (generally by a factor of 2 if you're setting it to an "effective" resolution of half the native resolution or higher, or a factor of 3 if lower,) then downsampling it to the screen's native resolution using the GPU. So if you set your 4K screen to "looks like 1280x720", it will actually render at 3840x2160, three times the chosen resolution, it will just make everything 3x larger. Fonts will look super-crisp, any apps that are properly made with Retina in mind will have their interface elements 3x bigger, but smooth. Apps that aren't Retina aware will display big ugly interface elements. Notably, it took Google a while to update Google Chrome to be Retina-aware, and Chrome uses its own text renderer, so it looked like garbage on Retina displays until Google finally updated it. If you set your resolution to "looks like 2048 x 1152" (on a 3840x2160 display,) it will render it at 4096x2304, then use the GPU to downsample it to 3840x2160 so that it looks sharp.
In systems with a couple-generation-old integrated GPU, and the earliest Retina-capable machines, you tend to see a slight performance hit if your "looks like" resolution isn't exactly half the actual native resolution because the GPU scaling takes a lot of effort that those older/integrated GPUs can barely handle. But modern GPUs can handle it with no problem.
