external display with laptop closed

I use an external display/keyboard with my MacBook Air. When I have the laptop plugged in charging, I can work with the laptop closed. However, if I unplug the laptop, the screen goes dark and I have to crack the laptop to get the view on the monitor again. That's not a big deal, but when I do that, the display is different than it was when the laptop is closed. By different, it is not as clear and there is a black boarder maybe an inch from each border. In other words, it's like I get a bigger/clearer display when the laptop is closed/plugged in.

Anyone have any experience with this?