More information. This issue doesn't seem to happen when the AVD window is on the laptop screen, only when it's on and external monitor (I don't have the multiple monitors setting enabled because I only want the AVD on the external monitor).
It seems to be much less flickery if I disable hardware acceleration.
My impression is that it aligning the pixel size for the window based on the resolution of the laptop screen even when the window is on the external monitor that has a different resolution and then it tries to scale the pixels to align and it looks clunky.
Also Changing the Graphics Interpolation level to "None" instead of "Auto" seems to help, everything looks quite a lot sharper.
If there isn't, I think there should be some clearer guidance when to use these settings for optimal affect. They're not intuitive and the defaults (at least in my case) or not good.
Why do we need graphics interpolation when we have dynamic resolution turned on? The resolution on the AVD should adjust to match the size of the window and the res of the screen it's on and there shouldn't be any need for interpolation should there?