All I can say is that I could not agree more. The old version allowed the user to see a much longer list of bookmarks before having to scroll. I don't get a benefit from extra blank space between the bookmarks in a list at the expense of not seeing my usual list of bookmark choices. It would be great to get back to a tighter listing, which has been the Firefox standard for years, thanks.

Sorry for the delay, it's hard to keep up with all the dissatisfaction. ;-)

I can give you a quick short-term workaround, but a more durable solution will require more work.

Temporary Fix (Firefox 89-90 ONLY)

For testing purposes, there is a preference to switch between new style and old style menus. It helps with the spacing, but might be a tad bit glitchy:

(1) In a new tab, type or paste about:config in the address bar and press Enter/Return. Click the button accepting the risk.

(2) In the search box in the page, type or paste browser.proton.contextmenus.enabled and pause while the list is filtered

(3) Double-click the preference to switch between true (new style) and false (old style)

In my test, the Bookmarks menu on the optional top Menu Bar was messed up in the existing window, but looked okay in a new window. You can do a regular shutdown and restart of Firefox to fix your existing window.

Longer Term Community Workaround

This involves setting up a userChrome.css file. The full instructions are in the following thread: https://support.mozilla.org/questions/1337841

I'm sure we'll refine that during the course of the month so when the temporary preference is removed, it will be airtight.