I need clarification on the topic of sprite scaling.

On page 39, the author presents code that is scales the sprites from 1024x768 to the current resolution. I have a couple of questions regarding this.

Do the hardcoded 1024 and 768 values represent the resolution of the sprite or texture? Also, how does this work in a real project? Is it understood by the art team to pick a default resolution to create all sprites?

Thanks in advance for any assistance.