Mathematically, a circle is defined by all points that have the same distance to the center point. In d&d on a grid, distances are measured in 5ft squares, where a diagonal distance is the same as an orthogonal distance. This results in mathematical circles being square on a 5e/5.5e d&d grid

so, one fireball, having a mathematical 20 ft radius, can completely fill a square room of 40x40 ft.

Yes I know the book has a circular template for spell effects. However, using that on a grid has the weird effect that a target can be in a place that is 20 ft removed from the center (diagonally) but at the same time not be in the area of effect of a fireball cast on that center point

A 30x30 or even 40x40 room would be far more satisfying. Fireball’s radius is 20ft, diameter is 40ft.