This is because as part of the update, Apple has increased the resolution of FaceTime video calls for the iPhone 8 and newer to 1080p. You will need to be on WiFi (or 5G if you own the iPhone 12) in order to take advantage of the higher resolution, but it’s there if you were hoping to make calls in better video quality.
Apple did not announce these changes in the iOS 14.2 changelog that was released not too long ago, so this does come as a nice surprise. Apple has been rather conservative when it comes to webcam quality, where it took the company years before they eventually introduced a 1080p camera to the 2020 iMac.
It is possible that Apple is trying to ensure the best stream possible by broadcasting in a lower quality, but given that our internet speeds are a lot faster these days, it’s about time that Apple start to increase the resolution. We’re sure that some might prefer an even higher quality stream, but 1080p is usually more than sufficient.