A vectorized image is a drawing made from lines and angles described mathematically, as apposed to a drawing that is made up of dots. When you enlarge an image made of dots (such as a jpg), it gets chunky and looses resolution, similar to looking at a newspaper picture with a magnifying glass.
When you tell a vector image to increase in size it applies your wishes to the length and radius of the lines that make up the image. This produces no limit in resolution and therefore the enlarged image looks exactly the same only bigger.
That's a pretty rough explanation.....