It will increase the image, for example make four pixels out of one from the original image. You need to choose an algorithm for that you can use whatever, just don't use Bilinear (Bicubic is better) or Nearest Neighbour (it's only for pixel art). To increase the resolution, you can go to Image -> Scale image to a new size. You'll soon see for example which size of the canvas is fine for your computer, which is too big, or which size is good for sketches, but not huge landscapes. If you don't intend on printing it right now, just focus on the size in pixels. It's only useful in dealing with (1) printing (it's basically a value that converts pixels to inches and inches to pixels) or (2) vector shapes and text (but you probably will just define the size of vector shape or text visually, without the need of calculating stuff). You can, in fact, change dpi in Krita without any change in actual resolution in Krita, because dpi on its own doesn't mean much in terms of digital painting. You can define the size of the canvas either in pixels, or in inches+dpi (or cm+dpi, you get the idea: real-world measurement+dpi).

What really matters is the size of the image in pixels. I'm sorry, but /u/Kyte_McKraye is not giving you a good advice.

Krita pixel art