Apparent vertical exaggeration can occur when your XY units are different than your Z (elevation) units. Vertical exaggeration in the 3D View assumes the X,Y and Z units are all the same. If they are not the same, then a vertical exaggeration of 1 does not equal 1:1 scaling. In this case, please refer to to the article below on determining the Vertical exaggeration value to enter in order to get a 1:1 map:

Assign a scale of 1:1 (vertical exaggeration=1) in the 3D view when the Z units are different from my XY units In Surfer?

Updated November, 2021