[Galaxy S 4 Q&A, Help & Troubleshooting] BarryH_GEG:
Smartphones are typically held 10-12" away from the eyes. At that distance your eyes aren't capable of resolving detail to a point you could tell the difference between a 720P display and 1080P display better yet see pixels on a One X. If you typically use your device at a distance of 6" then you're probably correct.

From another thread...

On a small format device 1080P is a gimmick. Someone said they could tell the difference between HTC's 1080P displays and previous 720P displays. They couldn't; not unless they held the device closer than 10" or have better than 20/20 vision. And it has nothing to do with the display and everything to do with what the human eye is capable of processing. Does anyone know why Apple coined the term "Retina" display? It isn't about a specific PPI, it's about providing the maximum number of pixels the human eye's capable of resolving at 10-12" away which is the typical distance people view their phones from. For the iPhone 5 that's 326 PPI (it varies based on display size).*

Here's a little physiology lesson. The 20/20 human eye has a maximum visual acuity of 1 arcminute. That is, two points must subtend an angle greater than 1 arcminute in order for a 20/20 eye to resolve the two points. What this means for displays is that pixels must have an angular subtense of 1 arcminute in order for your eye to resolve the detail in the content. Above that, your eye could discern things like jaggies on text and the edges of icons. Detail below 1 arcminute isn't perceived by the human eye any differently whether a display has 267 PPI or 468 PPI. The Note II’s 5.5” display at 267 PPI has an arcminute subtense of 1.073 which, based on the size of its display, is near perfect. The One’s 4.7” display has an acrminute subtense of 0.64 and anything below "1" is wasted.

And with the new fixation on resolution things like brightness, contrast, and color accuracy get swept under the rug because all people are focusing on is a PPI count rather than the actual quality of the display. To get to 1080P every display released so far has suffered in quality in some way. The DNA's display was less bright with less contrast than the One X's and the One's has less color accuracy with poor color temperature.

So, with the human eye being the lowest common denominator the selection of PPI is being done ass backwards. Deciding on the optimum PPI for any given device should be an arithmetic equation; not manufacturers arbitrarily pulling numbers our of their butts to out-feature each other. The above talking about what the human eye can process is irrefutable fact (ask your ophthalmologist). With an arcminute subtense of "1" ideal for the human eye to process detail, the manufacturers should pick the*lowest*PPI that achieves "1" arcminute at 10-12" away. Why the lowest? Because the higher the PPI the bigger the drain on the battery, GPU, and CPU. And why reduce the performance of a device when the end result is the human eye can't process the additional detail being provided anyway?

It's all kind of moot anyway because as OP pointed out, it's a "gimmick" to sell more phones. So we're all going to end up with 1080P displays one way or the other because that's where manufacturer's marketing is taking us.

Also, the additional detail higher PPI displays are capable of only apply to CGI like the UI, buttons, and text. Pictures and video are spread out over more than one pixel and are never aligned with the pixel structure of the display so their inherently fuzzy. Videos are even worse because their also moving.

This article explains further on how PPI impacts content on a small format device.

http://arstechnica.com/gadgets/2012/...ssibly-matter/here's​