Well, there's a difference between compressing an image for internet usage and the automatic resizing that is done on a site like this in order to preserve the page format.
When you take a picture with your camera, in its original state, it is thousands of pixels long/wide and MBs of memory. Using a simple photo editing program, you open the image, resize it to 800x600 (as an example) and save it as a .jpg and the image will be compressed to be internet friendly. The "size" of the image does not just refer to its dimensions, but also how much memory it uses to be displayed. Even in .jpg form, if they come right off your camera, they are HUGE.
The site's auto-size feature keeps a 1200x1000 size image from blowing out the page format, but it won't address the amount of memory that picture takes to load.