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In this case you will want to let XSplit resize it (because it uses a sophisticated software algorithm) to achieve a better image quality.
Also, if your recording or live stream is in 720p, all sources at higher resolutions are generally just a waste of resources on CPU, GPU, memory and external hardware.
The problem is that the web camera software in general tends to suggest that ‘automatic’ modes are always the best. Most web cameras, especially web cameras in the sub $100 USD range, cannot keep stable frame rates if the exposure settings are too high (it can also affect cpu usage).
The automatic mode does not acknowledge this, as it is mostly concerned about image visibility and not about maintaining a steady frame rate.
Therefore, in a dark room, automatic mode will keep you visible, but at a lowered frame rate.