Padding is the space around each photo and block in your Publish post. There's one padding setting for the whole post, and it's applied around every block, so the spacing stays even everywhere.

The padding setting is in the toolbar at the top of the window. Click the dropdown and choose 5px, 10px, 20px, 50px, 100px or 200px, or type your own number of pixels.

Here's an example of how changing the padding changes your post:

If your published post has extra space that you don't see in Publish, for example extra space under full-width photos, it's likely coming from your website's styles (CSS). Ask your web developer to check your website's CSS.