Ok I understand now. I've just set them both to one below 'more space', however be aware that the values for each preset may be different on different displays - I believe it's somewhat related to the PPI (which is a factor of physical size vs resolution). So for me the options from right, 'More Space' down to default, one from the left, are:
3008x1692
2560x1440 (what I'm using to test this now)
2304x1296
1920x1080.
Just showing two screens with several apps in the background it looks ok of course.
I've just run a 1080p YouTube video in safari for several minutes and tried stuff like dragging the window around, etc and surprisingly didn't get the sort of jankiness I used to get under Mojave. Possibly the software layer is a bit more optimised in Catalina.
So based on this (so far) positive result I'm going to try running at my preferred res (2304x1296) for regular use, I'll try to remember to report back in a day or two about how it goes.