> How does VGA manage to show 720x400 resolution text on a 640x480 display? 

This might be your basic misunderstanding here. A display as used back then and VGA was designed for, is not a fixed 640x480 device, but an analogue CRT monitor.

Number of pixel per line is thus only limited by output speed of the computer - and beam manipulation speed of the CRT. Likewise the number of lines. Due the way of the receiver of a CRT is build, it will adapt. This is called synchronisation (syncing). A 15% higher pixel rate is quite within reason for next to all CRT.

Later, when Super VGA came, [Multisync CRT][1] appeared. They were able to sync to quite wide rates from 320x240 to 1600x1200 resolutions, some even beyond that.


  [1]: https://en.wikipedia.org/wiki/Multisync_monitor