Why do HD channels display OK on non-HD TV sets?

How is your TV connected? If it's by composite or coax then the signal to the TV isn't 720P. The box does not/can not send an HD signal via those two methods, it sends an SD signal.
 
That text is generated by the box....not the TV...just ignore it.

What TEXT? We are talking about a video signal. And this particular SD TV is connected by S-video from STB to AVR then into S-video from the AVR to TV.

But I am interested in this from a learning experience--not just how it works in my particular setup. If an HD signal is "tuned to" but ultimately is routed to an SD TV, does the STB convert the signal 'down' to SD before shipping it out to the TV? If so, how does it know it needs to do this since the box has no clue that the connected TV isn't HD?
 
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This has everything to do with the way the TV is hooked to the converter box. If you are hooked up via HDMI or component video cables, you can watch in HD if your TV supports this. If you are hooked via coax or composite video, you are always watching in SD. Remember, you are limited to the abilities of both your TV and the box you have.
Correct me if I am wrong but that text box that BHNtechXpert shows the best resolution available from the box you have no matter how it's hooked up and how old the TV is I am pretty sure.
 

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