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The "Zoom to fit" button in iOS designer does exactly the same thing as "actual size", at least on my screen.
If I manually zoom and center to take up the entire screen height, then "zoom to fit" *shrinks* it to take up about a quarter of the canvas.
This is by design. The current functionality of "Zoom to fit" will only zoom out. If the actual size of the content already fits on the screen then it does nothing.
However, I agree it might be more intuitive if it were to zoom in if the actual content is smaller than the canvas.