You still don't seem to get that there are _two_ different resolutions: one is what the game _thinks_ it is running at, and the other one is what dosbox is actually outputting at.
The emulated VGA card, the one your game "sees", is limited to 800x600 right now. If you play Settlers at 800x600 (*in game*), you will notice that it's incredibly slow and sluggish. Even when the game runs at 640x480, it's not terribly playable.
But all this has nothing to do with which size the dosbox window is: If you tell dosbox to use an output window of 1024x768 (via hwscale= or fullfixed= or scaler= or similar), the game still runs at 640x480. Dosbox enlarges the 640x480 screen so that it fills a 1024x768 window, and that's pretty fast. You can easily get high resolutions that way. But it has absolutely nothing to do with what resolution the game uses.
The essential difference is: The emulated VGA card is SLOW. Really slow. This is simply because it's emulated. It has always been slow, but no one notices that, because at typical game resolutions like 320x200 or 640x480, it's not that bad. Unfortunately, with 640x480, some games already get sluggish. Now, if you double the internal, emulated resolution, your game gets 4 times slower! No box available today is fast enough for that.