The problem is from the TV itself. Sony X1 processor can't handle 120Hz input properly. It halves vertical screen resolution (internally) to achieve that refresh rate. I had the 43" X85J with same issue. It was also evident on my Xbox Series X video output.Another follow up, sorry for spamming. My windows machine also looks jagged with 120hz but clears up with 60hz.
I'm using this usb-c KVM switch linked below to switch between my Surface Laptop 7, and M1 pro Macbook Pro. I'm using all 48GBps certified usb-c cables, the Cable Matters DP -> HDMI adapter and a HDMI 2.1 certified cable to 43" Sony Bravia X85k tv.
usb-c KVM switch:
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