It's not blown up and pixelated, it's just displayed in real size. And actually it is tiling, but to see it tile you'd need a screen the size of your balcony door.
That's because the image you have uploaded is 3168×4752 pixels: a lot wider and a lot longer than any 'normal' screen.
(Yes, I know that such images used to tile nonetheless, but that's no longer the case because uploading such huge files is a mistake.)
You need to use an image editing application to downsize a copy of the image to the desired pixel dimensions, then upload and use that copy. If you're not familiar with pixel dimensions, you can get an idea of what to aim for by keeping in mind that the width of your left sidebar is 160px and the width of your right sidebar is 250px.