I can explain what's going on.
"Scale to fit" will make it so the prototype fills as much of the screen as it can, while maintaining the correct dimension ratio.
When you set it to "Unscaled" it will use the actual dimensions of the screen. I only have a Nexus 6 to test on, but as you can see, the prototype has the borders all around it as well.
Maybe I'm misunderstanding. Are you saying you're viewing this on your Nexus 5, using the Nexus 5 dimensions and still getting the borders?