Yes, pictures are resized when you upload them. Doesn't matter how big they are, they are resized while maintaining aspect ratio, until they fit both the horizontal and vertical image size limits.

Ivan mentioned the layout issue, and that is because our VB is quite old. Xenforo (and maybe recnt versions of VB) has a more modern approach: No matter how big it is, it will always be displayed in a way that makes it fit the screen, and when you click on it you see the full sized image. But even there, admins will usually set a limit because large images take up a LOT of diskspace, and diskspace is very costly.

Fwiw, that's why I use local images only for things like workshop pictures, work in progress, things like that. And for high resolution pictures of my blades, I use imgur.