Virtual screen resolution confirmation dialog confusing

Binary package hint: gnome-control-center

I have a laptop connected to an external monitor. I used the Monitor Resolution Settings dialog to set the resolutions for the two monitors (internal, external).

When I chose equal resolutions for both and then clicked "Apply", I was shown the dialog displayed in the first of the two attached screencaptures.

As a User Experience, this is frustrating and confusing for a couple of reasons. E.g.
 * I do not even know what the terminology of "virtual resolutions". What is that and how would I or should I manage it?
 * What is the "configuration file" that is mentioned? Which file?
 * It seems like this is some nonstandard workflow. Are there long-term repercussions for allowing this Screen Resolution to do what I assume is its job anyway? That is, if I modify this unknown file, can it be undone? Will it stop me from doing anything in the future?
 * What if I do not want this file to be changed? Can I still get the screen resolutions that I just asked for using the dialog?
 * "No" is the default action (it has focus), but choosing "Yes" is "recommended" according to the dialog. Which one should I do?

I chose "No", since I figured something bad might happen in the long run. The second screen capture is then presented to me. It has similar issues with User Experience:
 * I could not do what I wanted to do because of some settings that I do not know about.
 * Why was I offered the option of choosing the resolutions I did when I would be told that they could not be applied?
 * Why isn't my "virtual resolution" big enough to contain my screens?? Isn't this applet supposed to handle this stuff for me?

Furthermore, the "Help" button on the Monitor Resolution Settings dialog box does nothing. That is, no window pops up, no action is taken, etc. It just presses down and up without doing anything. If there is no help to offer, then there should not be a button.

I tried looking for Virtual Resolutions in the Ubuntu/Gnome help and found nothing.

I think this is a generally confusing process and I still don't know what the config file is and why I need to concern myself about it and I don't know what my tradeoffs are (are there any?) for choosing to modify it or not, other than that I cannot change to some subset of all the resolution choices (which subset?).

I wish it would "just work" by making the change to the resolutions that were listed in the initial applet.

Thanks!

Ubuntu Distro 8.10 with normal updates.
Gnome 2.24.1
Linux machname 2.6.27-11-generic #1 SMP Wed Apr 1 20:53:41 UTC 2009 x86_64 GNU/Linux

gnome-control-center:
  Installed: 1:2.24.0.1-0ubuntu7.1
  Candidate: 1:2.24.0.1-0ubuntu7.1
  Version table:
 *** 1:2.24.0.1-0ubuntu7.1 0
        500 http://us.archive.ubuntu.com intrepid-updates/main Packages
        100 /var/lib/dpkg/status
     1:2.24.0.1-0ubuntu7 0
        500 http://us.archive.ubuntu.com intrepid/main Packages