Just got done messaging with IT from Apple, this is a new “feature” in iOS 17 and this is how it goes, if you zoom out or try to make it look the way you want it to, the image will blur, if you zoom in, it unblurs. As of now he said, there is no known fix to this other than having a wallpaper that perfectly fits the format for the specific iPhone you are using. He said Apple did this to provide a cleaner look in general to the time battery indicator etc. Idk if this is true or not, but knowing Apple, this is most likely the reason.
So, if you want a perfect fit when finding a wallpaper for your iPhone, I recommend what has worked for me so far after this nonsense of a “feature” has been added, this link shows all of the pixel sizes etc for each iPhone up to the 14 Pro Max. I can’t currently find the sizes for 15’s but I’m sure they are out there. https://cnbgear.com/tips-guides/iphone-wallpaper-size/