Imagine the shake moved the camera 5% of the frame to the left. To cancel it, that frame is moved 5% to the right, which leaves a strip 5% wide with no picture on the left-hand side. Hiding strips like that on every side takes a zoom of roughly 111%, and any rotation swings the corners in further still.
Zooming also costs a little sharpness. At 120%, every five pixels of the result are made from about four pixels of the original, so fine detail softens slightly. That is why the stronger presets, which allow more zoom, are kept for footage that really needs them, and why keeping the full frame is worth it for detailed, wide shots.