display – How to get full resolution for LG 27UK650-W with MacBook Pro?

I bought a LG 27UK650-W monitor that has 4K UHD resolution (3840 x 2160). When I connect it to my MacBook Pro (2019, 16-inch, Big Sur), the fonts are huge. I had to switch from “Default for display” to “Scaled” and move it down a couple of notches. Once I’ve done that, the System Report under About This Mac shows:

Resolution:  5120 x 2880 (5K/UHD+ - Ultra High Definition Plus)
UI Looks like:  2560 x 1440 @ 30.00Hz
Framebuffer depth:  30-Bit Color (ARGB2101010)

It is listed as LG HDR 4K Display 27-inch (3840 × 2160) under Displays in About This Mac.
By comparison, my work laptop has a Dell U2719DC with 2560×1440 pixels and it works perfectly with the default settings (no scaling).

I tried both a UtechSmart 6 In 1 USB C Hub and a Belkin USB-C to HDMI Adapter (HKQ22ZM) with the same result.

Shouldn’t Apple “just work”? I expect to plug in a monitor and have all pixels available and the UI in some sane state in terms of font sizes. What am I missing?