I think it might have to do something with the "Panoramic screen mode". I do NOT have this mode on, yet it still feels like it is.
This website says this for example:
"This feature is still under development, so there is a possibility that the display may be distorted or battery consumption may increase."
...
"Unlike PICO 4 Ultra, windows cannot be freely positioned with depth, they must be placed on the panoramic workspace, resulting in curved windows."
It probably doesn't distort anything on the Ultra version, but I suppose PICO devs just adapted this feature incorrectly to the regular version of PICO 4...