-Man, she looks fine!
-Can't you tell? That's a horrible pixelated shot of an underdeveloped highschool freshman in their underwear trying their best to make a seductive face, dude.
Pixelation happens when an image displayed on a monitor (TV, VGA, LCD, etc...) is stretched beyond its intended resolution, this causes the individual pixels themselves to be enlarged, making the image look blocky and generally bad.
I got this porn MPG on my computer, it was 320x240 so when I put it in full screen, it got so pixelated I couldn't see it well enough to get hard.