After working on my image and closing. I re-opened the file and was asked whether I wanted to link or embed the image.

I did not understnd this

Can someone explain?

Thanks

Ha!

Think I got it what you got with the shrinking canvas and what not.
Raster images can be embedded in the svg file -they can be recovered from your document- or they are just linked from a certain directory you opened them from.
Linking can reduce filesize drastically, though if you move the raster image to another folder and/or sending someone the svg without the raster images provided, a "linked image not found" image would appear in inkscape.

So.
By saving your file, you used save as png, instead of save as svg.
To keep the vector format, you would need the latter.
Now, if you want a raster copy of your work, use the export option instead of the save as png.
Inkscape works at 90 dpi, meaning if you export any part of your image at 90 dpi, you will get the exact same dimensions in pixels that you see on your canvas at 100% zoom level.
But, the save as png option has a fixed 72 (?) dpi setting, making your image 0,8 times smaller than you drew it -400/8 pixels.

Thank you