This is no more mysterious than the fact that you can see individual (nearby, bright) stars with your naked eye when you go outside at night. The angular resolving power of your eyes (or of small telescopes) compared to the angular diameters of even nearby stars is terrible; nonetheless, you can still see them.
The key thing to understand is that objects which are too small to resolve will be blurred by the telescope/lens/eye (plus atmospheric turbulence if you're not in space) into a point spread function [https://en.wikipedia.org/wiki/Point_spread_function]. The light from each star is thus spread out over multiple pixels in a pattern which is basically the same for all the stars, varying only in total brightness and thus detectability; for really bright stars, the light in this pattern can be traced out over a significant fraction of the entire image. This includes features like the diffraction spikes; we don't see these for stars in M33 only because they're too faint to register.