Scale and Composition

This depends entirely on what you want to do. If you want to export a file that's the size of your composition, then you'll need to scale your video. If you want to preserve all the original quality of your video then you should match your Comp size to your video size.

There is an effect called Detail-Preserving Upscale which you can apply to your video (while it's at 100%) which will do a better job scaling your video, but it can be a slow effect to render.

One other thing, it's very likely that you don't need to be working at 16-bpc (which is shown in your second screenshot). Processing frames at this color depth is unnecessary if you're not compositing or if you're not even familiar with what this function is. Your video is only 8-bpc, so you can get faster performance if you click that button and switch the mode back to 8-bpc.

Any time you scale an image, there is a quality loss. Scaling up is more problematic than scaling down. If the original footage is an 8-bit MP4, the quality loss will be more noticeable than with a 10-bit format like Prores HQ. Color can be sampled as 4:2:0, 4:2:2, and 4:4:4. MPEG files (MP4 H.264 is the most common) are almost all highly compressed with the frames sampled using a scheme called IPB. The "I" frames compress all RGB and Luminance values. The P and B frames are frames where the moving colors and luminance values are predicted by calculating the movement between frames. Most of the data is thrown away. You should never use MPEG compression for production unless there is no other option. MPEG compression (MP4's) are designed to be streamed, not to be used as a source for production. 

Now that I threw all that at you, if you scale up, quality loss becomes noticeable at anything higher than 125% for most footage. Some scaling algorithms (effects/methods) can do a little better at scaling up, but the quality loss will always be there. Changing the project settings to 16 or 32-bit color helps. Starting with higher bit depth footage and a professional format also helps.

There are some 3rd party plugins, and other techniques can slightly improve a scaled-up raster image. The best approach depends on the type of footage and the amount of scaling. If there is no alternative but to scale up the footage, you have to try and do the best you can. I have had to scale up to about 150% from time to time, and if you are careful, you can hide most of the artifacts and make the shot look more like the rest of the footage in your project. 

I hope this helps.