Your photo is resized so that it can be faster for viewers to load it over the Internet. The quality is not significantly reduced but it is just enough for viewers to appreciate it.
The reason why we ask for you to upload a larger version is for our database. In case you win in a high profile rumble, we will need a high resolution version of the photo you uploaded. For example, if we will make a Lomo wall, we will need a higher resolution of the photo. But of course, this is with the permission of the owner of the photograph.