Native means the resolution of your monitor. Usually on a 20 inch to 27 inch, this is 1920 by 1080. Smaller and larger monitors it can be different.
Letterboxing refers to some folks having a 16:10 monitor and are playing a 16:9 game, or vice versa, and the letter box stops the stretching to fill the screen with an Aspect Ratio mismatch or is sometimes needed when sending the signal to a TV rather than a PC Monitor.
So, the first step is to figure out the resolution of your monitor, then set the game to that resolution.