Ensure Hyper-V installed so you have Optimize-VHD
Shutdown WSL2 with
wsl --shutdown
In powershell PS as admin cd into wsl2 dir - e.g.
[user]\AppData\Local\Packages\CanonicalGroupLimited.Ubuntu20.04onWindows_79rhkp1fndgsc\LocalState
Run: Optimize-VHD -Path ext4.vhdx -Mode full
OR - Look at GitHub - okibcn/wslcompact: Compacts the size of the ever-growing WSL vhdx images.