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Avatars are resized by the extension depending on your ACP/avatar settings (phpBB settings) and managed (via CSS) then by the core code (phpBB) depending on their position relative.
Example the miniavatar on the left side of your nickname at the top-right of the page (login/logout) it is the same avatar just resized, like phpBB does.
There are screenshots in the first 3 posts of this topic.