I got the font looking smooth. Character Size scales the label image in relation to the parent face. Upping the Character size is like passing a magnifying glass over something small. eventually, the more you magnify it the blurrier it gets.
Reducing the Character size and increasing the font size essentially makes the object itself bigger, not just magnifying it. Which is why the edges become smooth.
edit*
Ben kept the Character size at 1 and scaled down in the transform. I’ll see if this causes problems for me in the future…