It increases the aspect ratio from 640 x 480 to 1920 x 1080. We are scaling using Apple's Core Image which uses interpolation to create new pixels. We also spent some time tweaking the results in order to get the best quality we could by including some amount of sharpening during the scaling process. By default HD imports or conversions are automatically compressed in order to prevent huge file sizes.
Give it a try by importing in SD and then converting to HD to see how you like it. If you don't, you can immediately perform the "Undo" function (Command +Z) on your keyboard to restore the conversion to its original state.