Hi Sanjyot,
It's hard to say what the best approach is without the delivery environment ready yet. If the delivery environment is strict about the size it gives to the lesson, then you would want to follow that size. But learners almost always have different size screens (more or less toolbars), or resize their browser windows to all sorts of different sizes and shapes, and you'll never really be able to control that.
Check out the second half of this video, it shows the different options for scaling:
https://share.smartbuilder.com/public/support/lesson-size-and-scaling.mp4You may be interested in the "Scale to Width" option, which will get rid of the blank space on the sides... but if the lesson needs more vertical space, it will create a scrollbar. This is similar to the "pinch to zoom" you mentioned for YouTube - the whole space is filled, but some amount on the top/bottom is cut off (in the case of the lesson, they can scroll up or down to see the rest).
Personally, for a use case like this where you don't have really tall pages, I would stay with the settings you currently have (Scale to Width & Height) and make the background dark.