If you set <window width="640" height="960" if="android" /> (or whatever you prefer) in your project.xml file, we will automatically scale and letter box your application. This does mean you will have black bars on the edges of the user’s screen when the aspect ratio is not a match.
Otherwise, our default behavior is to resize the stage to the full screen size, and to dispatch Event.RESIZE so you can handle this yourself. We have some simple logic in “PiratePig” that demonstrates this, though we should make a version that is DPI-sensitive some time.