Which M1 Mac (assuming it's a MacBook Pro or Air) are you running? Is this an external or internal monitor?

At first glance, some of what you see may be normal if your Mac's display is set to 1680x1050 according to https://docs.vmware.com/en/VMware-Fusion/13/com.vmware.fusion.using.doc/GUID-E142FF07-372C-4952-9AF7...