I think I might have found a solution, and it has to do with a couple of different components.
Things to be aware of:
1. Render Quality (ingame setting) - this is important, it should be at least set to 100, if not more. This does indeed play a big part in render sharpness of text etc. Higher the better image quality but it is very taxing on performance.
2.Camera zoom - there is a point where buttons/text etc in cockpit will have to become blurry. You have to take in consideration the 3d scene being rendered and how far out you zoom. For example, if you zoom to minimum value all the way out, there is no way that every single detail on every single button will be rendered crisp and clear. In a 1080p or even 4k res you would simply lack the screen real estate (i.e pixel density on your monitor) to be able to render such fine details at that zoom level.
For ingame settings -- i mostly followed the guide and recommended settings listed here: https://forums.flightsimulator.com/t/how-to-graphics-settings-and-performance-guide-su5-complete-retest-8-2-2021/132407/1
Now, for nvidia control panel settings I was able to minimize blur with this configuration. Copy all as I have in the following screenshots. Make sure you are doing this in the 'program setting' tab. Find Microsoft Flight Simulator and select it, then proceed to configure settings. What this does is apply the configuration specifically when that particular .exe is running. Do not do in global setting because some of this configuration might hinder performance of your desktop apps.
*the stuff in bold just means that it's different from the default global setting but this only applies to my particular system as your default settings might have been different.
** On my image below, for the settings that starts with "Use global setting (...)" the part you want to focus on and match is whats inside the parenthesis.
*I'm running on a MSI Duke 1080Ti, so some of the anisotropic settings you might be able to set higher if you have a better card.
Edit:: I have a g-sync monitor so not sure if that stuff would apply to you. if you don't, just ignore those lines.