An ICO file isn't a single image. It's a small container holding several differently sized bitmaps side by side, and Windows picks whichever entry matches the display context instead of scaling one image on the fly. That's why generating a proper 256x256 entry matters even though most everyday icon views, like a taskbar or a small folder thumbnail, are far smaller than that.
Legacy sizes still use an older internal format
Inside that same ICO container, the very small legacy entries, 16x16 and 32x32, are sometimes still stored as classic uncompressed bitmap data for maximum compatibility with old software. The 256x256 entry is typically stored as an embedded PNG instead, since raw uncompressed data at that size would bloat the file considerably. Tools built to generate a complete ICO handle this mix automatically, so there's nothing to configure manually on your end.
Vector sources save you from ever seeing pixelation
If your logo exists as an SVG or as vector shapes in design software, exporting directly at 256x256 sidesteps the upscaling problem entirely, since vector paths render crisp at any size rather than being built from a fixed pixel grid. Keep that vector master file around even after generating your icon set, since future displays or higher-DPI contexts may eventually call for larger sizes than 256x256.
Windows can keep showing your old icon after you replace it
A common source of confusion is that Windows caches icons aggressively, so File Explorer can keep displaying an old icon even after you've swapped in a freshly generated 256x256 file. If your new icon doesn't show up right away, clearing the icon cache or restarting Explorer usually fixes it, rather than anything being wrong with the resized file itself.