Quick update here — the spacing issue may be helped by enabling the brave://flags/#brave-compact-horizontal-tabs flag in brave://flags.
As for the tab design, if you want to use the one that is redesigned by Brave that (imo) looks significantly better than the previous implementation that was inherited, then use the default appearance — that is, ensure that the Updated horizontal tabs design is set to Enabled or Default.
Text on tabs is easy to read and grouped tabs design is simplified with the same functionality. I am going to close this thread as the original purpose was to track users who were having trouble with accidentally clicking the “dead space” at the top of the window and somehow devolved into general tabs appearance.
If you would like to open a new thread or “issue” regarding the way the new tab design looks, you’re welcome to do so, but I can tell you now that we are not likely to jump into another redesign anytime soon.