(Click image to enlarge.)
A “near-future release of Honeycomb” (Android 3.2?) is on the way and will include a new zooming feature to make all of those non-tablet apps function much more properly on your big-screened device. Since many developers have not created or updated their apps to have tablet-specific features, this new zoom option should help end users out.
If the developer of an app you are using is not forcing their app to look a certain way or has not targeted Android 3.0, then you should see a new box in the system tray which gives you two options for viewing:
If you were to choose the new “Zoom to fill screen” option, the app will essentially switch over to how you would expect the app to look on a phone. It’s more of an emulated size that is then blown up to match your larger screen, making it much easier to use certain apps. A great example is in the picture at the top of this post.
Via: Android Developers Blog