Well, the way I described is the way that scaling works in MSFS, and it can easily be confirmed by simply going into the options and playing with the scaling slider, as it will tell you what the resulting resolution will be. The scaling factor is applied to each the horizontal and vertical resolution, not to the overall number of pixels on the screen.
That’s where your original calculations, while correct in their own context, don’t apply to MSFS as 50% scaling gives you 1/2 the vertical and horizontal dimenstions, which results in 1/4 (1/2 ²) of the pixels, not 1/2 of the total pixel count. And inversely, 1080p with 100% upscaling gives you 4K (3840x2160).
This is the same way nVidia’s DLSS and AMD’s FidelityFX Super Resolution calculate resolution to scale their images as well.