Progressive scan permits you to output at a minimum what is the equivalent of a 480line (actually higher) resolution from your Xbox.
Normally the output is interlaced, one frame frame for one set of scan lines, and another for the subsequent one.
This "cheats" the tv, so to speak, but also causes horrible artifacting.
It's like having a 240line picture then showing two frames one shifted slightly above the other. When all is said and done, it's still 240 scanlines.
In 480p mode, you get 480 "true" scanlines, so the resolution appears to be doubled.