Yep, that is an answer. For others this is the issue and....
....I would not worry too much about it. The pop-up layer-mode menu orientates itself (roughly) alongside the existing layer mode. (where the mouse click is)
So Normal first in the list needs all that padding. Some other layer mode, padding not required.
If you really do not like it, try the Windows system theme and the pop-up is different again or move the layers tab up to the top dock.
Edit: ie same layout as Gimp 2.8
....I would not worry too much about it. The pop-up layer-mode menu orientates itself (roughly) alongside the existing layer mode. (where the mouse click is)
So Normal first in the list needs all that padding. Some other layer mode, padding not required.
If you really do not like it, try the Windows system theme and the pop-up is different again or move the layers tab up to the top dock.
Edit: ie same layout as Gimp 2.8