My laptop monitor's native resolution is 1280x800 and it just isnt big enough for me. I tried to set the resolution higher, but my graphics card only showed options upto 1280x800, and I figured that was the max res my card would allow. I found a monitor out on the street a few days ago and its native resolution is 1024x768. I have been playing around with it a bit. I was looking under the resolutions for it, and I can set it upto 1400x1050, so apparently my card allows for more than 1280x800, so why can't I set my laptop monitor to higher?
Every monitor has a specific set of supported resolutions. 1280x800 is the highest that your laptop monitor supports. It simply doesn't have enough physical pixels to make it any finer than that.
I'm not really sure how your specific monitor does this, because usually they are the same thing, but your monitor could have the ability to take a 1400x1050 image and shrink it down to its native 1024x786 display, which means you lose a lot of the image quality (and sort of defeat the point of the high resolution). The Wikipedia article has more info if you're interested in how it works.
No, because, like I said, your monitor physically doesn't have enough "dots" to display the image any sharper than it already is. I know it's frustrating, but there's no solution to this, unfortunately. It's like asking how you can make your car go faster; you can't, at least not easily. Sure, you could change the engine,1 but then you might as well get a new car. Like @studiohack said, it's a hardware issue, not a software issue, so there isn't anything you can realistically do about it (especially with a laptop).
Why exactly are you looking for a higher resolution? Just to fit more stuff on the screen? Maybe there is a workaround if you're trying to do something specific.
1. Bad analogy, I know. :)
You simply can't set your resolution higher than what your graphics card will let you, it is the cold, hard truth.
Sure, the monitor supports a higher resolution than your laptop, but your graphics card has to handle both, thus it will only let you set it to the max that which both can be used.
If you need a higher resolution, I would recommend buying a better/different graphics card for the job...
Your laptop monitor may only support 1280x800 while the external monitor has a native resolution of 1024x768, but can display a higher resolution than its native resolution (generally with some degradation of image).
If the video card in the laptop is offering the higher resolution for the external monitor it is because only the external monitor can support it.
So video card can support up to at least 1400x1050, laptop monitor can only support 1280x800, and external monitor can support 1400x1050, but natively it is set to 1024x768.