1024x1024 is one of those numbers that shows up across completely different fields for the same underlying reason, it's a power of two. Specifically it's 2 to the power of 10, which means it divides evenly all the way down through 512, 256, 128, 64 and 32. Graphics processors, texture pipelines and neural network architectures all prefer power-of-two dimensions because they map cleanly onto how memory is allocated and how convolution operations are structured internally.
The practical consequence is that when you feed a reference image into an AI image generator, it typically gets rescaled to the model's native resolution before processing begins. If your reference image is 3000 by 4000 pixels from a phone camera, it's going to get squashed to roughly 1024 on the shortest side anyway. You get more control over how that squashing happens if you do it yourself first, with a mode you've chosen, rather than letting the model's preprocessing handle it.
Fill, Fit and Stretch, which mode to use for non-square images
Resizing a non-square image to a square canvas means making a choice about the mismatched pixels. Fill scales the image to completely cover the 1024x1024 canvas and crops the center as needed, no padding, no distortion, and it's the default mode here. Fit scales the image to fit entirely inside the canvas with nothing cropped, filling any remaining space with white, which means it's not the right choice if you need a transparent background. Stretch distorts the image to exactly match 1024x1024, which almost always looks wrong for photos but can work for logos or abstract textures.
For AI reference images, Fill is usually the better starting point, diffusion models tend to respond better to a frame that's filled rather than one with blank padding around the edges. If you need precise control over what gets cropped rather than relying on Fill's automatic center crop, the crop tool lets you set an exact 1:1 crop and position it manually before you resize.
Using 1024x1024 as the top of an icon size chain
Because 1024 is exactly double 512, and 512 is double 256, and 256 is double 128, you can downscale a 1024x1024 master to any of these sizes without fractional pixel rounding. This is why a 1024x1024 source is a common starting point for app icon submissions, smaller sizes get generated from that master. If you're building a favicon and want to go from 1024x1024 down to a proper multi-size favicon.ico, converting the resized PNG with the PNG to ICO converter is the next step, or use the favicon generator to produce a full set of sizes at once. If you need a smaller file for the web afterward, converting the PNG to WebP is worth doing, since this page's own output is limited to JPEG or PNG.