Hi
A program, an update or something else may have changed the setting for icon spacing. In Windows 10 (and I suspect the same goes for Windows 11), you could try this if you are comfortable editing registry values:
1. press Windows+R to open Run window, type regedit and hit Enter.
2. Navigate to the following location
HKEY_CURRENT_USER\Control Panel\Desktop\WindowMetrics
3. In the right panel, find out WindowMetrics. This is the horizontal spacing. Double click on IconSpacing to modify the value. Choose any value between -480 to -2730 where -480 represents the minimum spacing and -2780 represents the maximum spacing.
4. Now the vertical spacing is same as step 4. All you need to do is double click on IconVerticalSpacing. Now set any value between -480 to -2730. Tap OK to save changes. The icon spacing is thus changed.
5. Reboot the computer to save the changes.
Good luck...
The default value is most likely -1125, like in the screenshot, since I have never edited this setting.