So I finally found the answer after searching for a year!
When you get this warning message after using USB Startup Disk Creator
"The driver descriptor says the physical block size is 2048 bytes, but Linux says that it is 512 bytes."
Means that the dd command in behind the nice GUI forgot to specify the bs=2048 option.
First identify which drive letter the USB stick has received from the kernel
sudo parted --list
For example this USB drive is on Device Serial Disk h: (/dev/sdh)
Model: KINGSTON DataTraveler G3 (scsi)
Schijf /dev/sdh: 4001MB
Use the information to wipe all the partition tables and data from the drive
⚠ WARNING THIS NEXT STEP WILL DESTROY ALL DATA ON THE DRIVE ⚠
sudo wipefs --all /dev/sdX
Make sure that you have chosen the correct USB stick for the value of X so you don't accidentally wipe your harddrive/SSD
It's not that the unused space is wasted. The USB disk has been corrupted by USB Startup Disk Creator.
For some reason USB Startup Disk Creator has become CD-ROM creator. It writes your USB-Stick to iso9660 format which is only intended for CD-ROM's.
Since new computers don't come with CD-ROM players or writers anymore this is a regression bug and has been reported here: