Lastly, I should mention the existence of wp-fractional-scale-v1. Wayland applications that add support for this can allocate a correctly-sized surface to draw on and skip the overscale-then-downscale process. This is similar to much like how KDE treats X11 applications by default and requires applications to properly render the scaling on their own. Since this was only merged relatively recently, a whole generation of Wayland code had already been written without it. I do not expect applications to universally support this any time soon. That said, Chrome has already merged support for this and Firefox support is available behind the flag widget.wayland.fractional-scale.enabled. Perhaps Proton will support this in the future, which would allow games to properly run on the right resolution, and skip all the mess with Xwayland and scaling.

fractional-scale-v1 Wayland Fractional scaling protocol:

"Protocol for requesting fractional surface scales" https://wayland.app/protocols/fractional-scale-v1