How do I fix this annoying Zoom Out issue with my camera???

Have you run camera module diagnostics ('secret' test mode menu)? Does the same thing happen when using a 3rd party camera app or just in the stock one? Have you tried selecting a different picture quality setting and seeing if that has any effect?
 
If clearing data/cache on the camera app doesn't work I'd try safe mode next. As a default app it should work in safe mode.

It's also possible the camera module has had a hardware failure, but to rule that out usually requires a full factory reset.
 

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