The Sequence is the foundation upon which you build your video project. If the foundation is bad, the video will be bad. Typically, you want the Sequence Settings to match the footage being edited. When you drop the first piece of media into a New Sequence (empty timeline), the properties of that Sequence will be set to match the media you dropped into it. So perhaps that first item was a still image, or a video clip of lower resolution than the bulk of clips you are using? Now everything is incorrect moving forward!
When starting a new editing project, it is best to right-click a video clip (the main footage you are using) in the Project Bin and select New Sequence from Clip. This will make the frame size, frame rate, pixel aspect, and fields match the source video for best results. Alternately, when you drop the first clip into an empty timeline, if the media doen't match the sequence, it will ASK you if you want to change the sequence settings to match the media, so be careful with that. That will work if using your main camera footage, but if dropping in some clip from YouTube or a still graphic or something, look out - you don't know what to expect!
How to fix current situation? Use New Sequence from Clip method to create a proper sequence. in OLD sequence, use Ctrl-A to Select All, then Ctrl-C to Copy all edits, then open the new sequence and use Ctrl-V to Paste it all into new sequence. If you had created any titles at the old resolution, or had done any scaling of the video clips, that may not translate well to new dimensions so you may need to revisit those things.
Thanks
Jeff Pulera
Safe Harbor