Dear Suraj,
Good day!!
Apologies for the inconvenience caused and please don't worry, let's work together on your concern and move towards resolution path.
I understand your concern and I have tested the behavior by installing the latest version of OneNote app on the Android device, where when I use the camera feature in the OneNote Notebook, the picture taken embedded is clear and almost same as the normal picture taken using camera.
Moreover, there is no separate settings in the OneNote app to alter the camera picture resolution and the camera feature uses the default mobile camera. If you feel the picture quality is low when compared with same picture taken from the camera app, you can take the picture with default camera and insert it into the OneNote Notebook pages via click on the camera in Notebook> Click on Photos> Click on Albums icon> Select the image and insert it.
Moreover, request you to report the behavior to the related development team via adding the feedback in the OneNote app on Android. Open the OneNote app>Click on your initials or profile pic at the top left> Send Feedback to Microsoft.
Thanks for your patience and understanding. Have a good day!!
Best Regards,
Sophia