Managing sound and video settings during Teams meetings and calls
If the camera is blurry even outside Teams, I'd check the camera itself first.
Try opening the Windows Camera app and see if the image is also blurry there. If it is, clean the camera lens and check for any privacy shutter or cover that may be partially blocking it.
If the Camera app looks clear but Teams is blurry, check Teams camera settings and make sure no blur/background effect is enabled. You can also update Windows and the camera driver from Device Manager.
If it's still blurry in both Camera and Teams after that, the webcam itself could have a hardware or focus issue. Microsoft also recommends testing the camera in another app to determine whether the problem is specific to Teams.