In hardware binning, charge from adjacent pixels is combined on the sensor before the analog-to-digital conversion. For N×N binning, the effective pixel size increases by N, the signal increases by N², and the spatial resolution decreases by N in each dimension. Importantly, read noise is incurred only once per super-pixel (not once per constituent pixel), which is why binning improves SNR more effectively than software averaging.
Effective well depth also scales with N², meaning 2×2 binning on a 20,000 e⁻ sensor gives an effective 80,000 e⁻ well — dramatically extending dynamic range.