I feel dumb for not knowing this...so if I'm on a 55 inch 1080p TV, I shouldn't be using Full RGB if the output of the game is 720p? Do I need to turn it back to full when I'm playing 1080p games like Forza? Or should I just always leave it to limited.
RGB range has nothing to do with resolution, it's simply the range of colors possible in the signal being sent to your TV.
An RGB signal has three color components: red, green and blue. A certain pixel is given its color by a combination of various amounts of these colors. If we're talking about the full RGB range, each of these components can take on a value from 0 to 255. Thus, pure red would have the values (255, 0, 0). Black is (0, 0, 0), and white is (255, 255, 255). Etc.
With limited range, the possible values are instead 16 to 235. That means that when your TV (if it only supports limited range) gets the values (16, 16, 16), it will display that as the blackest black it can. Similarly, (235, 235, 235) will be displayed as the brightest white the TV can produce.
Now, what happens if you feed that TV a full range signal? That signal will contain values all the way from 0 to 255. Now, this TV already displays (16, 16, 16) as the darkest black it can, so what would (4, 4, 4) or (9, 9, 9) result in? The exact same blackest black, when they should really be displayed as various shades of dark grey. The same problem happens at the upper end of the scale, with values over 235. Thus, you lose all detail in very dark and very bright areas. Instead of detailed shadowy areas you just get large blotches of complete blackness, which is known as "black crush".
So the solution is to feed the TV a limited range signal. In such a signal the original range of color values (0-255, which is what the consoles work with internally) is compressed into a limited range (16-235). Every color value is shifted to the proper relative value in this smaller range, so that what was originally 0 becomes 16, what was 255 becomes 235, etc. So now the TV gets a signal it can actually display properly, and what should be dark grey is no longer displayed as pure black.
So yes, if your TV doesn't support RGB full range (which most TVs don't) your console(s) should always be set to RGB limited range, no matter the resolution.
(Sorry about the looong explanation, I just think more people should understand what's actually going on here!)
If the XBO is giving the same crushed blacks with both full and limited range, then it would seem that instead of compressing the color range into limited range like it should, it's just "chopping off" the lower and upper parts so that all information in very dark or bright areas is simply lost (the same result as feeding a full range signal to a limited range TV).