My version of WC Prefs shows two choices for a Simple Web Webcam picture: 320 x 240 and 640 x 480.
Those are pixel dimensions, the "resolution" can mean two different things, the actual image file size or whatever the display device is set to. The file size is simply the product of the two dimensions; ~76,800 bytes for the smaller and ~307,200 bytes for the larger. Each of these files will have extra bytes for details needed for the OS and file attributes used by other things.
Many refer to those two numbers as their "resolution". Most camera makers use the number of pixels on their sensors as their "resolution", the higher the number, the better, according to them.
When viewing these images we need to tale into account the pixels per inch of the display device. Originally, the Macintosh broke the current rules by offering 92 pixels per inch and offering text at that same "point" size! "Points" defined text sizes in printing, the first Mac's now made it possible "what you see (on-screen) is what you get (on paper)"!
So, on-screen "resolution" is now way beyond 92 pixels per inch, your phone probably has well over 300 pixels per inch! If a web page specifies the dimensions of an image, it is easy for the browser to convert the 320 x 240 image so it will be more than barely an inch wide on your high resolution device.
As to your second question, I have no idea what you are talking about! I have never created a "Simple Web" page with WC. Most browsers will simply display n image at the dimensions provided in the file unless they are specified in the img tag or an appropriate CSS file. However, most browsers will change the displayed resolution, usually with command "+" or "-" keystrokes. Command "0(zero)" will usually return the resolution to the default setting.
Hopefully The Manual has some info on that "alter to fit" or others here will have some useful info and an answer.