native resolution is when you display a picture that uses all the pixels of a monitor,
if u have a 1280 x 1024 17 inch lcd native resolution is 1280 x 1024.
importance comes from the fact that an lcd cannot interpollate to lower resolutions without distortion, an old crt display can but an lcd no, so if you use on a lcd a resolution different from the maximum u loose quality on the picture.