When I draw art assets for a game, should I fill the whole tile/frame? Would it look good in a game if I use less than the 32 by 32 pixels of the canvas, like the picture below?:
When I export this pixel art, it changes the width to 21px and height to 28px, like below.
What is the standard practice that game developers go for? Should I change my drawings so they utilize all the canvas and stretches from the beginning to the end?
This is a stylistic decision you'll need to make, based on your game's gameplay needs and your own creative goals.
A few considerations you can weigh in favour of using the full canvas:
It allows room for more detail in each asset, so small forms don't become too hard to read.
If your game is tile-based, having items consistently take up the same grid width can help both with stylistic unity, and for players parsing the visual scene and planning/executing their actions. Assets of mixed sizes could make this look more chaotic at a glance, so it takes more effort to navigate.
Uniform sizing makes it easy to arrange and address a sprite sheet / texture atlas as a regular grid, without excess wasted space. If you're using a tool like RPGMaker that expects sprites to be laid-out this way, or writing your own sprite code, this simplicity is convenient.
And some considerations in favour of using different sizes for different assets:
Verisimilitude: in reality, objects are different sizes. An apple is not as big as a melon. If a melon in your game is 32 pixels wide, you might want the apple to use fewer pixels so it looks smaller than the melon, and so that the player isn't confused by seeing fruits far from their typical scales.
Workload: only paint as many pixels as you need. Extending all assets to the full width adds more space you need to paint, which might be redundant if the asset could be made clearly readable and serve its gameplay function at a smaller size.
Modern game engines and pipeline tools can handle sprites of mixed sizes just fine, automatically packing them into sprite sheets / atlases without manual fiddling or increased complexity in your game scripts.
