Not sure if this is a configuration issue, but my camera snapshot both in Chrome browser on MAC and the IOS companion app (see below) are blurred; not all the time every time, but frequent enough to be bothersome.
I had this issue with a reolink-520, although I’m capturing my camera feeds with zoneminder and then taking them into home assistant from there.
I solved the issue by taking the rtmp feed through ffmpeg instead which for me was;
rtmp://192.168.0.200/bcs/channel0_main.bcs?channel=0&stream=0&user=xxxxx&password=xxxxxx
Although I’m not sure about configuration straight into HA as I’m pretty new to that.
Try switching to using the RTSP stream instead of going over port 80, so switch the platform to generic and then enter the “stream_source:” as the rtsp stream, I can’t say exactly what the source would be without knowing your camera but the dahua wiki has this example;