The screen size advertised by Apple measures the "full screen" area, the undisturbed 16:10 rectangle of pixels. I just took measures on both a 14 and a 16 inch Macbook Pro. The screen we get is indeed slighly larger.
If you want to avoid the extra space, it's as easy as using a 16:10 resolution size. The menubar will drop down to the 16:10 space.
I just tried to do this and Apple has obfuscated that there’s even a 16:10 option. You have to click deep into the Displays customization presets menu. They don’t even label the presets with a display ratio and have them labeled with some obscure Apple design lingo (Apple XDR (P3-1600 nits)).
To change it you have to first display the hidden list by enabling a “display resolutions list” toggle.
That is not something a “I love Apple because it just works” person can figure out.
Exactly my point. The setting you’re likely looking for is hidden and a similar one of even more advanced color profile technical options is front and center.
If you want to avoid the extra space, it's as easy as using a 16:10 resolution size. The menubar will drop down to the 16:10 space.