Page layout output paper means(default setting) that the image is the same size(minus the boarders)as the paper. Now, if you check the reduce/enlarge box you have the option to reduce or enlarge the image on your original paper size. If you look at the the image of the paper on either side of the settings you will see the photo image reduce in size but it will still be printed on the original paper size. So if you are printing on an A4 and you use reduce or enlarge, your image will be what ever % you set in Reduce/Enlarge custom scale box.Under normal printing you would leave this setting at the default, no boxes ticked. Hope this helps.
Remember that this is in the "Page Layout" tab/section of the printer driver. In the event you are printing straight from the printer driver where you did not pre-format your print job in Photoshop or Lightroom, or another editing program this would be the only way to do some rudimentary page layout. Notice that if you leave the "Reduce/Enlarge" box unchecked the second drop down "output Paper" defaults to "Same as Paper Size". If you check the box it then changes to whatever you have selected in the drop down list "Paper Size" above it. If you chose to enlarge your image using the "Custom" option you would obviously have to have paper loaded in the printer that is larger than the "Paper Size" which in this case would be the same as the image size. You could also select a paper size in the Output Paper to a preselected size.
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