OK, let me reiterate what you've already know first. Parallels Desktop graphics settings provides the choice between:
VM gets quarter of native macOS resolution, every Windows pixel is quadrupled. Windows DPI scaling is set to 100% by default. This mode is actually almost the same as older non-retina display, but being contrasted to native retina apps it appears fuzzy, pixelated, blocky, ugly or you name it.
VM on a retina display is set to the same resolution as macOS, resolution on external non-retina displays is artificially quadrupled, Windows DPI scaling is forced to 200%. This mode was first introduced when Windows 7 did not support per-display DPI, and it may still work better for some apps in Windows 10. Windows applications that support DPI scaling should look as good as native macOS apps. Older Windows apps that don't advertise scaling support are up-scaled by Windows itself and will look fuzzy. Apps that advertise DPI scaling support but don't fully implement it will misbehave in various ways. A particular application that doesn't fully support DPI scaling may behave better with lower scale factor: most will survive at 125% just fine, but fail at 150% or higher. The problem is -- text in Windows is too tiny on a retina display at 125%. There isn't much Parallels can about that.
- Best for external displays
All VM displays are set to native resolution, Windows adjusts DPI scaling automatically per-display which can be overridden (ex. 175%). This works best staring with Windows 10. In this mode you have more control over scaling factor, Windows applications, however, are still required to fully support DPI scaling. Moreover, per-display DPI support is even more complicated.
The above assumes that resolution in macOS matches display physical resolution. The matters are complicated by macOS resolution scaling, the thing you can set using macOS display properties. Newer MBPs come configured to what was called "More space" mode before: a 15" with 2880x1800 panel is set 3840x2400 by default. Parallels in turn will set Windows to that logical 3840x2400 resolution, causing text to be a bit small. Some people will try to fix that, setting the "correct" 2880x1800 resolution in Display properties in Windows, just to find out that the display becomes fuzzy and out of focus due to double scaling. Whether or not to use macOS resolution scaling is a matter of personal preference, but I would recommend against manual setting of Windows resolution.
Starting with Creators update Windows 10 allows per-application scaling overrides:
Right-click on application icon, open Properties, select Compatibility tab, check "Override high DPI scaling behavior" and select scaling by Application/System/System (enhanced).
This may or may not improve application appearance, you'll have to try and see.
One of Parallels Desktop 13 features is an improvement to scaled mode: guest image is now processed with a filter. This improvement is not universal and largely subjective but that's as much as we could do. Some people even found it to be a degradation, see these threads:
https://forum.parallels.com/threads/windows-2000-full-screen-is-blurry-on-parallels-13.341595/
https://forum.parallels.com/threads/disable-anti-aliasing-in-scaled-mode.341709/
Overall, there's no silver bullet. There's no magic to bring DPI scaling to non-supporting applications except for pushing their developers. And the only reliable way to avoid application misbehavior is to run at Scaled resolution and accept fuzziness.