Why can't Parallels just tell the Win 10 VM the true native resolution for my machine, and have Win10 apply a user-selected scaling on top of that native resolution? Parallels is changing the Win10 native resolution as a function of my "MacOS - System Preferences - Display - Display - Select Scaled" setting. I've fiddled with the entangled settings and workarounds below endlessly to try to control the MacOS scaling and Win10 scaling independently, on top of the native resolution, without success.
The native resolution of my 2016 15" MacBook Pro is 2800 x 1800. I'd like my Win10 VM to recognize that as the native resolution (i.e. under Win10 VM - Display Settings - Advanced display settings, default to 2800x1800 and mark that as "Recommended") and then I'll apply a scaling under Win 10 VM - Display Settings - Change the size... . Applying a scaling on top of Win10 recognizing the native resolution makes the scaled text crispest.
As I count it there are three sets of entangled settings and workarounds:
1) MacOS - System Preferences - Display - Display - Select Scaled, Select 100%. (For me, this makes Win10 treat 2800x1800 as the default resolution, which is good, but it makes my MacOS apps too big so I end up switching back and forth as I switch between my VM and MacOS).
2) Parallels - Hardware - Graphics - Resolution. I have 'Best for external displays' selected. This makes switching from the laptop's display to an external display easiest. I found that in a Parallels KB article, but I do not really understand what each of these does.
3) Workaround: "Try changing Scale to fit screen drop-downlist choose Keep ratio follow this
KB articleand check how it works" from Raj above. I tried that but the MacOS scaling still impacts what the Win10 VM thinks is the native resolution.
I bought a Mac so that I could stop fiddling with settings and have stuff just work. I bought a Retina MacBook Pro so that the display was awesome. It feels like Parallels is fighting me by changing the Win10 native resolution as a function of my "MacOS - System Preferences - Display - Display - Select Scaled" setting.