The first time I connected my 27-Inch 4k display to my macbook it offered me to virtually scale the resolution of that display, so I could take full advantage of the 4k resolution while having it in 2560x1440 scaling, so similar to the iMac. After re-connecting the mac to the display it's been virtually scaled to 1080p and everything is just huge. When going to the screen options I'm only offered resolutions up to 1920x1080, even when clicking the options key it'll show up until 4k but it'll no longer scale texts and windows to make it look like 2560x1440.
I had the same issue as you on an LG monitor an I think I found a solution to get the Larger Text - More Space option back.
When I got my LG 43ud79-b, everything worked fine. The mac recognized the monitor with 4k res and I was able to go in to my monitor settings and select the more space option.
At one point the monitor had a suggestion overlay saying turn on HDMI Ultra HD Deep Color by going to Picture -> Picture Adjust -> HDMI Ultra HD Deep Color to on, which I did.
After that point, the monitor was only recognized as a 1920*1080 monitor and the scaled options only had resolutions instead of the Lager Text - More Space options.
Turning off the HDMI Ultra HD Deep Color option makes the mac recognize the monitor as a 4k monitor again and brings back the original scaled option. Hope that works for you.