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A few cameras that have image stabilization built into the body can take a sequence of images with the sensor moved slightly in each one. The images are then combined to generate one image with higher resolution than the sensor can provide in a single frame. It's possible that phone-based cameras might do something similar using an accelerometer to detect ...
Yes, if the sensor is truly a 1600x1200 (two megapixel) device and the camera is artificially generating 5 megapixel images, then yes, one could say "extrapolated" — or, dishonest, pointless scammery, since this doesn't provide you with any real advantages. To be pedantic, we wouldn't say that the sensor is extrapolated. We would say that the 5mpix image is ...
Absolutely. This is called "superresolution", and we actually have a number of questions and answers on it in the superresolution tag. There is also a wikipedia article where you can learn more.
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