Hi there,
he settings in the Customizer > Layout > Blog Are solely for the Featured Images if the theme is displaying them.
it has no control over what WordPress does when convert to blocks, swaps an image out for an image block.
i had a look around to see if there were any other issues like this.The
This is the closest match i found that shows convert to blocks breaking image sizes was this:
https://github.com/WordPress/gutenberg/issues/35050
Not sure its related, but might be worth checking the images HTML.
One thing to try, although i am not sure this will work when converting blocks, is to set the Image Blocks default size to full using this PHP Snippet:
function set_default_image_size() {
update_option('image_default_size', 'full');
}
add_action('after_setup_theme', 'set_default_image_size');