Remember that the actual resolution is a product of the two. ie : final resolution = global setting x per app (DCS) setting.
Then..... FSR downscales the render first to the factor you place in the FSR settings file, does its algorithm stuff, and then the image is upscaled BACK UP to whatever you set to be the final resolution using the product of the two Steam VR resolution settings.
The frame rate increase is a result of the FSR algorithms but comes at a cost of a degredation in quality of image DESPITE being at the produced at the desired resolution. That is where the sharpness filter is used if desired. Alternatively, you can experiment with increasing the final desired resolution - but obviously there comes a point of zero return as the benefit of increased frametime of the FSR algorithm gets cancelled out by the cost of setting increased resolution (and thus more pixels to move) to combat the induced blur of the image due to the downscale/upscale process.
....At least that is how I have understood the process.