In cover view, the covers are displayed inside a fixed-size box with invisible borders. When you choose "square" the box is as wide as it is high. When you choose "portrait" the box is two thirds as wide as it is high. These boxes will be laid out on the shelf side by side across the screen, filling the row as much as possible.
How the cover is displayed inside the box depends on the "stretch to fit" option you choose. See the FAQ answer
What does "stretch to fit" mean in cover view?