Re: Display Resolution is what it refers to.
Well yes, you can display more physical information on this but I think the point is that the amount of extra physical information you can display doesn't scale proportionally with the screen size.
Put it this way, 576p on a 20" telly, when you're sat several metres away on your sofa, looks fine, no problem, not many people would get any benefit from starting to watch higher definitions as the increased pixels/inch ratio would start to become more than the eye could pick up.
Now go and buy a bigger TV say, a 50" screen. 576p suddenly looks dreadful so you start watching from a HD source. Imagine said HD source is limited to 720p. Now, even though it's got more physical information in it, the 720p picture on the 50" TV won't actually looks as clear as the 576p picture on the 20" TV, as for every inch of viewing space, you haven't got as much information as you had before with your 20" TV.
So pixels per inch is actually quite important for me (as for many others I would imagine). I'd be surprised if someone hadn't done a study on what the peak value is.