How do I change a monitor's physical dimensions in the Windows 10 Display settings for Multiple Monitor settings?
You cannot.
It also wouldn’t matter, because neither physical dimensions nor the scaling factor affect how the cursor (or anything else) transitions between screens. It’s purely pixel-based.
Consider the following example:
The left display (1) is a 15″ 4K laptop display. The right display (2) is a 27″ 2560x1440 display. The left display (1) is set to 200% scaling, making the “effective” resolution 1920x1080. None of it matters, except the real resolution.