iPad Pro M1 11': Stage manager with Display Zoom won't go fullscreen

On iPadOS 16, portrait mode, I used to be able to have two top-bottom splits in fullscreen (they would snap to fill the entire screen), using Stage Manager. I was able to set it up with Settings > Display & Brightness > Display Zoom > More Space.

It looked similar to this: https://www.reddit.com/r/ios/comments/z0cem7/stage_manager_lets_you_use_top_and_bottom_split/

I just checked that now on iPadOS 17 and it seem like apps won't stretch all the way and go fullscreen in Stage Manager anymore.

Did anybody else encounter it? Am I doing something wrong?

Thanks