What you’re seeing is an issue with the xfce desktop environment that Kali Linux uses as its default. It does not detect resizing of the window as a trigger to change the resolution of the display like GNOME and KDE do. This is a long standing bug in xfce.
You can work around this by using the display preferences within the VM to reset the resolution of the VM once you have resized the window. The new size of the window should appear as one of the options.