I'm guessing that it works in a similar manner to computer resolution. Having more pixels on a computer screen means a clearer image and better resolution. The resolution also depends on how big of an area the pixels are contained in and the size of the pixels. Having the pixels within a smaller area means the pixels will be smaller and thus a better resolution.
I think that our eyes work in a similar manner where light causes our pupils to contract and thus the pixels or in this case, the sensory receptors cells get smaller while remaining in the same number thus increasing in resolution and resulting in a clearer image. In darkness the opposite would happen where the cells get larger and give us less resolution and a less clear image.