Preview mode fails to recognize when layout is big enough to use full-scale preview
If you pop the view out into its own window and maximize it (on a 1920 x 1080 monitor), then you still get the "view is not big enough using a scaled down preview mode" behavior even for the smallest preview mode (1280 x 800) which should fit with room to spare. (I clicked the Ok and don't show again on the dialog if that matters). See image below:
This was found testing !1889 (merged), so the screenshot is from that branch.
master has other issues using preview mode in a popped-out layout window that that branch resolves.