Since the M1 Macbook Pro 14″ (2021) has this webcam thing (where the screen is partially cut out) the OS automatically resizes the display area smaller (below the cutout) for fullscreen apps (e.g. VLC).

Can I disable this? (e.g. in terminal)

When I watch a movie, there are black bars on top and bottom anyways.

Your display is 16:10. TV shows are 16:9 [& movies even narrower aspect]. The only way to eliminate the back bars would be to crop the movie as you're watching it, which VLC can do.

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Crop to 16:10 will eliminate the black bars by expanding the image so the sides drop off the edge of the screen until the top & bottom fills.

Original aspect 2.39:1

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cropped to fit 16:10

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You can change how the notch behaves per app by Using Get Info on an app before you launch it, then checking or unchecking the ‘Scale to fit below built-in camera' option.
Pic from iMore

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