All digital images are made up of thousands of dots of color, arranged in a grid. A pixel is the smallest part of that grid. So, a 1024-pixel wide image has 1024 dots in each row of dots. If the image is also 1024 pixels high, it has 1024 of these rows, making a little over 1 million dots, or pixels.
What you are doing by manipulating an image is changing the color or shade in many individual dots at the same time. If you type in 2000 into the zoom field and hit Enter, you can see these individual pixels in your texture image. If you hold the book at arms length and squint a little you'll see the colored pixels make up a nail in the wood.
The reason you resized to 1024 x 1024 pixels is because the image you had was too large (it held too much information) and so had a large file size. In gaming, we have to be constantly aware of the speed at which the game will render while playing it, so graphics file size is a big issue. In fact, 1024 isn't the final size you...