The link BK refferences is a good one to get the basic understanding. One thing, however, that is just glossed over in the Projector Central article is the loss of resolution in you are projecting 16:9 material on a 4:3 projector. For instance, if you get a 4:3 projector that is 1024x768 (786,432 pixels) and you project a 16:9 image on it, your total pixel count will be 1024x576 (589,824 pixels). You have just lost 192 lines of vertical resolution (25%).
On the other hand, if you have a 16:9 projector that is 1366x768 (1,048,576 pixels) and you show 4:3 material, your pixel count will still be be 1024x768 (786,432 pixels) but you will not lose any vertical resolution at all!