Are you sure you're using CB Gallery and not CB ProfileGallery? That doesn't look like the display of CB Gallery, but the old CB ProfileGallery and its lightbox usage. You should upgrade to CB Gallery when possible.
CB Gallery expands to a maximum of 80% height and 80% width. It includes a footer below the image with a black background and more features. It is not a lightbox, but a modal window. The image is then expanded to fit the box. Yes, if you upload a tiny image it's going to be distorted as it'll be expanded to fit the modal window.