Issue Summary

Rounded hover states were added to dropdown items in FilterSegmentSelect and the settings navigation, but vertical spacing between items is missing. This makes hover states overlap and reduces clarity.

Steps to Reproduce

1. Go to /settings/my-account/profile (or any settings page)
2. Open the settings sidebar navigation
3. Expand a section with child items (e.g., "My Account" with Profile, General, Calendars, etc.)
4. Hover over child navigation items
5. Observe the spacing between items

Any other relevant information. For example, why do you consider this a bug and what did you expect to happen instead?

Actual Results

Expected Results