Please help me understand cutting, bulking, body recomp, etc.

This is a bit of a long one, but there's a TL;DR at the bottom.

My highest weight back in 2013 was close to 300lbs. Since then I have gone down to 170, then COVID had me slacking off and I got back to about 230 in June 2024. During that time I loaded up the LoseIt! app, set myself a goal of 170 and now as of today I hit that first big goal. This has all been done through nothing more than a calorie deficit and 10k+ steps a day, while maintaining high protein home-cooked meals and meal prep. (1500 calories during most days, occasionally will do 1600 or 1700 on 1 or 2 days of the week)

However after finally hitting my goal I set myself 10 months ago, I don't really believe that I have transformed my appearance in any significant way. I still have unflattering body fat in the typical areas guys hang on to excess body fat. I see pictures of guys my height (5'8") at the same weight as me who are absolutely ripped and it makes me think that what I'm doing has been for nothing or done "the wrong way."

I want to set myself some new goals, but from what I keep reading and what the TDEE calculators all tell me is that in order to gain more muscle and improve my physique, I need to eat more to "bulk". But to me that really doesn't add up when my primary goal is still to lose fat, secondary goal is to weight train to maintain (or ideally gain) muscle mass.

I read bodybuilding forums, weight training subreddits, random articles online, youtube videos of people who have gone from extreme obesity to a model of fitness - all of them talk about body recomposition and how weight training in a deficit, with a high protein diet is this magic formula that immediately shreds the fat off you and makes you look like a Greek god, but I recently added in some strength training and I can barely lift half of what I used to when I weighed way more. On top of that, I feel just depleted of energy when I do lift because I am still eating at a 500 calorie a day deficit, even on days when I weight train (and I don't eat my calories back from exercise). So that has lead to me working out for a week or two, then dropping it for a few weeks, then effectively starting from scratch again or trying out a whole new workout routine.

I'm hesitant to add any calories to my caloric budget to account for the increase in activity because I was always told I should enter "Sedentary" in the fitness apps when calculating TDEE, so I am just genuinely confused as to what the heck any of this even means anymore. I still have a lot of fat to lose and am still at 26 BMI (Overweight, nearing normal) so I wouldn't say I'm in need of a "bulk" phase but I'm just lost on how I'm supposed to start actually improving my physique and not just dropping the number on a scale.

tl;dr: 5'8" SW:300lb, CW: 170lb unclear on how to take the next steps and set my next goal. Any and all advice is greatly appreciated.