I noticed this first when my iMac with W7 can't run Skyrim with medium setting and 720p.
I changed the resolution to 800x600 and I was able to play the game. Later on, I got myself a new laptop and was able to run it at 720p with High details.
I never got the same amount of immersion on my laptop as on the iMac. I first suspected the size of the screen to cause that feeling but when I also changed the resolution on the Laptop to 800x600 it felt better again.
Now the same with Assassins Creed 3 on the 360 : Whenever I play in 3D, the lower resolution adds a lot to the graphical fidelity IMHO.
I can't tell for sure why I'm feeling that way but I suppose a lower resolution + upscaling blurs the picture in a way that you are not directly faced to obvious graphical faults like low resolution textures in the distance and have to imagine the scenery from all pixels.
Just take this picture...
...and zoom it ,so it fits your screen to see what I mean.