In the resolution settings, you need to uncheck the checkbox "Retina-Display". That will give you access to some lower resolutions, without everything being huge.
Try with 1920x1080 resolution at first, if the iMac can do it with a good frame rate, this resolution strikes a flexible balance for the size and performance.
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Try with 1920x1080 resolution at first, if the iMac can do it with a good frame rate, this resolution strikes a flexible balance for the size and performance.