The PC boots in text mode, and on a VGA card the text mode indeed has a resolution of 720x400. As the text mode  was the most used standard mode before GUI programs and operating systems were loaded, so it made sense to name the mode as 720x400. However, the monitor actually cannot know what the exact resolution is, because for example 320x200 graphics mode has virtually identical sync polarity and timing. So the monitor has to guess what it shows given the sync signal rates and sync signal polarity. Most likely it will show 720x400 with any 70Hz 400-line mode, such as 320x200 mode as well.