I could be diagnosing this wrong because I haven't found any community or blog posts about it. It appears that increasing font-size and/or line-height causes Outlook to scale padding in this example: https://litmus.com/builder/abb68ab

However, it may not be padding. It might be that I'm not able to control the line height? The problem was the same in Outlook.com without font-size: 100%, but that fixes it there.