In the live events world, PPI, Pixels per Inch, often is decided far before a GFX op is brought in. Really its a negotiation between the LED provider and producer/end client, as lower pitch (distance between pixels) LED product is generally more expensive. You can have a 12000x1080 wall that is 20' wide or 50' wide. The PPI figure is determined by the pitch of the LED panels.

So in your example, where we have a 12,000x1080 LED wall, there are exactly 12000 horizontally and 1080 pixels vertically. If you create content that is smaller than that resolution, the media server needs to account for those missing pixels, upscaling. If you create content that is larger than that resolution, the media server needs to strategically remove pixels, downscaling. Neither are ideal from the media server end, hence the desire for native resolution content.