What format is the texture is showing it is? When you have the texture selected, it should show a preview of the texture of it at the bottom of the inspector window, along with the format of the texture. For a desktop project with high quality compressions settings, it should show:
“2048x2048 RGBA Compressed BC7 UNorm 5.3 MB” (or 4 MB if you have Generate Mip Maps disabled).
However I noticed you have an Android tab for the texture settings, which along with the “3 MB” size and compression artifacts you’re seeing makes me think this is a project with Android as the target platform. In that case the format is likely going to default to ETC.
The ETC texture format has terrible quality, especially for normal maps, but is the only compressed texture format universally supported on all Android devices. If you don’t need to support OpenGLES 2.0 devices, you can use ETC2 or ASTC instead. ASTC will be the highest quality, but it is not supported on all GLES 3.0 devices, though is supported by the vast majority of GLES 3.1 devices. ETC2 isn’t quite as nice, but is still a significant quality bump over ETC. If the texture format isn’t supported on the device currently running it, it’ll drop back to using an uncompressed version of the texture, though extracted from the compressed version shipped with the build. You can override what the default format is on a per texture basis, or in the Build Settings window.
If you’re wondering how save it is to move to ASTC, starting with Unity 2021.2, ASTC is the default texture format for Android projects.
Note that ASTC 4x4 and ETC2 will be roughly twice the file / memory size as ETC. You can try manually selecting ASTC 6x6 on the per-texture override tab (the Android icon in the Texture’s Import settings) which will bring it down closer to ETC in file size, but should still be significantly higher quality that ETC.
Thank you for reply.
Target platform is Android (VR headset). I want to support only one VR headset device.
Those are my current settings: Max size: 2048 Resize algorithm: Mitchell Format: Automatic Compression: High Quality Use Crunch Compression: Unchecked PC Android and PC tab have no overrides.