Edit: Just saw, that you have tagged UE5, my project was still UE4, so i quickly copied it to a UE5 project, but still the same results, textures work as intended and get not blurred.
This is how your shown texture looks in my test project. I just had downloaded your example and imported it, applied the paper2d settings, made a mini tilemap and set it in the world.
My camera is about 2800 units away, focus distance about 1300 (not sure why ^.^ but it delivers sharp images at its usual distance).
Testvideo:
Screenshot without sunlight to see, if a black background changes anything. The camera might not be perfectly straight aligned in that shot, but looked fine enough.
