The first value in the option field is blank, In field layout settings dropdown.

Hey @Nitin-shrivastava, I am unable to reproduce this issue because I was unable to locate the layout settings option on 'Manage Form Display' for any content type, maybe it persists within 'Manage Display' tab which has 'Manage Layout' button. I have tried it with Claro, Olivero and some contributed themes but the outcome is same, this issue maybe is related to some specific contrib theme and not core issue. Please update steps to reproduce.

@Tanuj. here's the video file demonstrating the problem and providing step-by-step instructions.

Did a little digging related to this blank option in select list, turns out it was put in intentionally. Found two issues related to this Do not add a section when editing an empty layout, or differentiate between new layouts and existing empty layouts → & Rename SectionStorageTrait to SectionListTrait →
so idk if this is good idea to remove the blank select option and what complications or bugs it might cause if we remove it. might need some inputs and review of others before pushing a merge request or patch so moving it to needs review.
also this issue is not related to claro theme but layout builder module or field layout module hence updating it.

If it was determined it was added on purpose not sure we should revert that unless there's a good reason.