Android: app area reduced after upgranding gradle to 7.4.0

I'm having a weird issue after I upgrated gradle to version 7.4.0 from 7.0.4.

basically it looks like the "app window" has shrink vertically, so some space appears above the navigation bar and it changes its color as seen below. it seems that the amount of space increases if the device has a taller form factor.

I can reproduce this issue only on devices with api >=26. also is not visible if the device is "short". for example is not visible on a Pixel 2 emulator or nexus 5 but is huge on a pixel 6.

below some visual examples: normal look: ( pixel 3 api 33 emulator)

wrong look: (pixel 3 api 33 emulator)

wrong look: (pixel 3 api 33 emulator with gesture navigation)

wrong look: (physical pixel 6a with gesture navigation)

wrong look: (pixel 6 api 26 emulator)

the Layout Inspector only shows the correct app area down to the bottom navigation menu, so it looks like the system is adding the extra space. also bottom sheets begin above the added space. so it looks like the app has a maximum aspect ratio and doesn't expand to the whole screen lenght

any idea what's going on?

from Android: app area reduced after upgranding gradle to 7.4.0