A pixelated picture is a very low-resolution image composed of large, visible squares, and is commonly associated with cheap webcams and low-end cell phones. These squares are unsightly and make an image look bad. While you can't eliminate the large pixels, which would involve increasing the image's resolution and adding details the camera failed to capture, you can reduce pixelation by smoothing the image.
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Press "Ctrl" and "O," then select the pixelated image via the window that opens. Press "Enter."
Click "Filter," then "Blur." Click "Gaussian Blur." Slide the slider until the image in the preview window is smooth. Click "OK."
Click "Filter," then "Sharpen." Select "Unsharp Mask." Slide each slider until the image looks a bit sharper; the exact settings vary for each image. Click "OK." You won't be able to make the image as sharp as an image taken at a higher resolution, but you can improve it slightly.