I should google the design process but maybe they're doing it to make the input box match the padding of the drop down menu. I don't remember how it worked in FF74 (it's one of those things that I don't notice if they just work) but disabling the new behavior with browser.urlbar.update1 false makes the drop down menu expand to the full width of the window, so no problems with padding. The new menu is as narrow as the URL box and padded, so they had a problem.
I don't like moving interfaces (I disabled all the movable parts in Gnome Shell, extensions authors be blessed) so I'm sticking with browser.urlbar.update1 false until it goes away in FF 77.
People on reddit have been complaining about how the bookmarks bar is harder to access now. The developer response has been something to the effect of "it's only covering the bar by a few pixels, it's really not a substantial difference."
I'd be inclined to agree with the evelopers, except, what is the advantage of that trade-off? Sure, you're only making the bookmarks bar very marginally harder to use, but, it's still something, and if users aren't getting anything out of it in return... why do it?