If you don't have whitelisting of different resolutions enabled - then Kodi will run at a fixed output resolution (with only frame rates optionally changing if you have the Player setting enabled to change refresh rate on Start or Start/Stop etc.)
The UI resolution setting allows you - I believe - to run the UI at a lower resolution than the output.
So you could run with permanent 2160p output - with frame rate (but not resolution) switching for 23.976/24/50/59.94/60 etc., with UHD/4K video played at UHD, and other content upscaled to UHD by Kodi, but with the Kodi UI running at 1080p resolution (upscaled to 2160p)
If you whitelist 2160p, 1080p, 720p etc. resolution output modes at various framerates - then Kodi will switch to 1080p output when playing 1080p content, 720p when playing 720p content etc. However this will only happen if you have whitelisted suitable modes.