If you enable the show all resolutions toggle, do you get another 1920x1080 option labelled "low resolution"? If so, the one currently selected is as sharp as it gets. - This menu does not impact sharpness relative to the other menu. In fact
(I have not yet updated my iMac to Ventura, but this should also be possible on Ventura with this iMac)
View attachment 2109057
View attachment 2109058
I can toggle between the two different views by option-clicking the "Scaled" button. I forget where you have to option-click on the Ventura settings, but it's still possible. Though IIRC it's not possible to get this view for MacBook Pro displays. (I have not pulled out my laptop to test, working off of memory here)
You may have accidentally option-clicked and changed the view for your external monitor, or something in the EDID (display settings the display tells the connected computer about) changed such that it gives macOS more options about supported configurations and macOS decided to change the view based on more possible configurations. I can't say for sure why it changed but I can say the sharpness and scaling should be the same, just presented in a different way