VLC Straming from a computer.

[endura]

When I use streaming in VLC to play a Bluray disk (from a computer), am I actually watching the video in full HD1080P

[Woodstock]

If that's what is on the disk, that's what is being fed to VLC. What it does with it depends upon your monitor - if you're using a 1920x1080 display, VLC will usually do some scaling to make it fit, because of the border around it for the program.