The post reads cropped but then talks about squeezed, so I gave a little extra info to help clarify.

One possibility is that the final image is cropped, ie some texel data is being removed completely from the image such as the top and/or bottom rows of texels.

In this case the image is considered just like it is worded "cropped".

Another possibility is the image is being rescaled, meaning that the entire image is kept but an algorithm is being used to compute new texels to fit the final image size and keep as much of the original image as possible.

Normally rescaling is done in a way that keeps the original aspect ratio, but when that isn't possible then the texels are effectively stretched or squeezed. Which is the second option listed in the question.