There are various interpolation settings that image editors use to rescale photos larger or smaller. For some reason, resizing a small photo larger sounds more artificial and destructive than doing the reverse: shrinking it. Is this the correct intuition and why?
I would argue the opposite:
Enlarging a picture does not add any new information, but neither is anything discarded. If you view an enlarged picture from an equally increased distance, it should appear pretty much the same as the original. If you shrink it to its original size, you'll get the original picture (ideally, supposing compatible algorithms).
In contrast, shinking a picture does throw information away, and no matter how close you get, you will have lost detail. Enlarging this image will never result in the original again.
It is true that shrinking an image throws away information that you will never get back. But the story is more complicated than that.
When you shrink an image, you make any anomalies in it smaller and harder to notice. You also reduce noise. Many times I've taken an image that I thought was hopelessly blurred and made it acceptable by shrinking. Here's one example:
On the other hand, enlarging will blow up those anomalies and make visible what might have been missed.
This is somewhat true. The information in a digital picture is more or less carried by the pixels, the more pixels, the more information.
When you scale up an image, you create more pixels but don't add any information, so the same information is spread over more pixels and the image is blurry.
When you scale down, you are in the opposite situation, you have to discard information, which is done by operations akin to averaging pixels. The perceived quality of the result is however variable, and depends on the scaling factor: we don't look at a tiny image exactly the same way as a big one, and you can have artifacts caused by aliasing.