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Microsoft Windows has never done a great job of handling displays with high pixel densities. Every tablet and netbook I’ve reviewed which had a 1366 x 768 pixel display on a 10 inch or smaller screen has featured sharp graphics and text — so sharp that it can be hard to see what you’re looking at. Adjusting the DPI and font settings can alleviate the problem a bit, but the problem is that Windows 7 doesn’t handle vector graphics the way as some other operating systems, which means that many graphical elements look smaller on high resolution displays.
Windows 8 could change things. The operating system will support automatic scaling for some graphics, and Microsoft has published guidelines (http://msdn.microsoft.com/en-us/library/windows/apps/hh465362) for developers to make sure their apps look good when scaled.
The long and short of it is that Windows 8 will support offer better support for small, high resolution displays and we could eventually see slate computers with 10.6 inch, 1920 x 1080 pixel screens. That would give the display a 208 PPI (pixels per inch). Most Windows machines today have 150 PPI or lower screens.
The Apple iPhone 4 and latest generation iPod touch, by comparison have 3.5 inch, 960 x 640 pixel displays with 326 PPI. The original iPhone had a 165 PPI screen. Graphics don’t look smaller on what Apple calls a Retina display though. Instead everything just looks better since when you look at the screen you can’t pick out individual pixels at all.