Full / Half / Quarter / Auto control the magnification, or how large the image will be in the preview window. Full will always display the image at the project properties size (usually 720x480 for you). If you have the actual window smaller then that size then you'll only see a small portion of the middle of the frame. Auto will adjust the frame size to match the window size.

Best / Good / Preview / Draft controls the quality of the image in the preview window. Best vs. Good is probably only important if the preview size doesn't match the project size. Best will put more effort into resizing the image so it looks better. Best also takes the longest time to draw each frame, so the preview may not keep up in realtime while the video is playing. You might see the frame rate drop to 20, or 10, or even lower frames per second depending on how complex your project is. Note that the video will still play at the correct speed, but it may have to skip over some frames in the display. As you move down the list towards draft Vegas will put less effort into displaying a good quality image, but it will be more capable of keeping up with the full 29.97 frame rate.