Reporting back on this. Computer has since then been rebooted and the issue has disappeared.
Thinking of it I believe that a previous issue with the displayport having been re-inserted more firmly in the monitor so that it would stay in place may have caused an issue with the GFX card/drivers in terms of supported resolution knowledge. Very weird though as Minecraft was the only application to have an issue.
Problem is occurring on Minecraft v1.11.2 (java version 1.8.0_25) on Windows 10 on a 2560x1440 screen. "Change size of text, apps and other items" setting is at 125% (recommended as per Windows).
In windowed mode, the cursor is perfectly aligned with the selection.
In fullscreen mode, the cursor is misaligned. Cursor on Multiplayer selects Singleplayer, you have to be a bit to the right of the start of the button.
Changing the setting indicated by initial report to 100% fixes the issue but that makes the overall Windows interface harder to read and would probably be even worse at higher resolutions.
The problem started occurring today and situation was not present since the 11.1.2 update. No specific change/installation performed since the start of the issue.
All other games are fine. Minecraft only issue.
Steps to Reproduce:
1. Place a grindstone somewhere, with an empty space below it.
2. Try placing a lantern underneath the grindstone.
Observed Results:
The lantern does not get placed.
Expected Results:
The lantern should hang below the grindstone.