Apparently there are pixel clock limitations which keep the resolution lower than what a VGA signal can provide. Good example is the Mac Mini G4.
I've picked up a Mac Mini G4 and it definitely works ok but I cannot get it to output a signal to HDMI on a monitor or an HDTV. I'm met with a black screen or the "no signal" warning respectively. Through a process of elimination, I have already ruled out any issues with the DVI to HDMI cable: I...
forums.macrumors.com
"This 135 MHz pixel clock limit for non-coherent displays only applies to DVI; VGA has higher limits (pretty much necessarily, because CRT monitors require more blanking which drives up the required pixel clock for a given mode). I've been able to drive 2560×1024 at 60 Hz from my G4 mini's VGA output. According to my calculator, that's a pixel clock of 218 MHz using CVT or GTF timings. For that matter, I've also been able to drive 3840×2400 at 13 Hz from my G4 mini's DVI output but that's only a 125 MHz pixel clock using CVT-RB timings and thus, safely within the mini's limit."
I also found that a DVI-D to Vga Adapter simply didn't work, and a DVI-D to HDMI adapter left me with a black screen after boot. After using a DVI-A to VGA adapter everything worked.
I experienced the same with DVI out on PowerMac G4 towers.