Drop a logo. Every size you tick — 16 to 256 pixels — is drawn from the original and packed into one .ico, the 256-pixel image as PNG and the small ones as bitmaps older software reads.
What goes inside the icon
An ICO file is a small directory of pictures, one per size, and Windows, browsers and shortcuts each pick the size they need. The default set — 16, 32, 48 and 256 pixels — covers browser tabs, the taskbar, desktop shortcuts and high-density screens. Every size is resampled from your original in halving steps, never from the previous size, so the 16-pixel icon is not an aliased sample of a large logo.
The 256-pixel entry is stored as PNG, as current Windows expects; the smaller ones as 32-bit bitmaps with an AND mask, which very old software requires. Tick “PNG for every size” for a smaller file if that software does not matter to you.
Pictures that are not square
An icon is square. A wide or tall picture is padded — with transparency, or white — or cropped to its centre, your choice. It is never stretched.
The icon is read back before it is offered: its directory is checked against the sizes you asked for, and the browser opens it once more.