Earlier tonight, while running an app in landscape orientation, my android phone's display was suddenly stretched about 200% vertically, relative to the device itself (forming a square cut off on both sides by the screen's long edges). Closing the app and returning my device to its native portrait orientation changed nothing. A hard reset did fix the issue, but I am still at a loss regarding what caused the issue.

My phone had been in the following configuration for many months prior with no issues:
Model: BLU Life One X2
Android Version: 6.0.1 (most recent for device)
Launcher: Microsoft Launcher
"Offending" app: PubG Mobile (played off/on for months, no prior issues)

As I mentioned earlier, hard reset corrected the issue, but I am still at a complete loss as to what would have caused it, and a google search yielded no applicable results. Does anyone have any theories?

A bug. It's not that interesting.

And thankfully, a very rare bug. I was just intrigued because I found absolutely nothing online.

It is possible for an app to change the screen resolution if it has the required permissions. An app needs to override the setForcedDisplaySize from the WindowManagerService to do so. This would require the WRITE_SECURE_SETTINGS permission, which is only granted to system apps unless your phone is rooted. Setting the screen resolution in this way would change it until a reboot like you described. Its a bit of a stretch, but its feasible.
If it is a bug, it is a really strange one because changing the screen resolution is something that is done extremely deliberately, there's no way someone accidentally changed it. Maybe an app took control of the orientation settings (like mobile games often do) and didn't manage landscape/portrait orientations properly? Not sure how it could do that though.