What it does
A 32 × 32 sprite shared online is rarely 32 pixels wide. It was enlarged to 320 or 512 so that it could be seen, and each real pixel became a block. Open that file in an editor and every stroke is ten pixels thick.
The downscaler looks for the places where colours change, works out the size of those blocks, and reads one pixel back from the middle of each. The result is the art at its real size, with its exact colours when the file was clean.