So the installed size is larger than the download size? That's perfectly possible - what you download is the apk, which is technically an installer. The installed form of the app will at the minimum include the apk plus the app element in dalvik cache (which is generated when the app is installed). In some cases it will include an object library as well.
These other files, plus the app's own data, will still be in internal memory even if you move the app to SD, so space will decrease. This is what DNick said above - only part of the app is moved. If you are running 2.3 then moving to SD will also move the lib (if any, not all apps have one).