It's weird how I didn't really care about the pinhole camera or my Pixel 5 weird dimensions until Ambient Mode started highlighting it. When ambient mode shipped (silently), I seriously thought I forgot that the aspect ratio wasn't 16:9 and the pinhole was so visible all these years. Turns out the bars hid these distractions.
The feature looks great on Desktop, but on mobile, I kinda prefer the bars actually hiding the edges of the screen, esp in fullscreen mode in a darker room.
It's cool that you can just turn it off, and hopefully, in the future, they let you toggle the feature in fullscreen and portrait mode separately.