Xwayland apps (running in legacy xorg) are extremely blurry under fractional scaling, native wayland apps can have worse rendering but not very noticeable.
The easiest way of checking if you have doubts is install xeyes and launch it. if xeyes follows the cursor inside the app you are tesing is in xwayland, if not is pure wayland.
Electron apps have to be configured to use wayland, whereas If you are in Debian check Firefox (ESR) is using wayland or install it through the offical deb repo of mozilla the latest. I think in the archwiki are the envronment variables to check.
And, for 125% maybe is just worth to you to just scale text to 1.20 using gnome-tweaks and leave it at 100% the scaling. It is not fancy, but it works. I have to use 150% so is too obvious/ugly to just scale the fonts…
Legacy apps have problems in windows also, I guess in MacOS now basically you are not able to run them, but 3 years ago I remember same issues with old apps, blurry or pixelated…
The main issue is gnome not letting apps to scale themselves, whereas kde has just a toggle for that. So in gnome you have consistent size across monitors (cool) but blurry apps when running in xwayland (horrible)