The laser only has two colors to work with, burned and unburned. So we need to think in terms of black and white whenever we engrave something.
In order to approximate shades of gray, a series of dots are used in a process called “Dithering”. That is what you are seeing. The farther apart the dots are spaced the lighter gray the image appears to be in that spot. It’s the same process that used to be used for printed newspaper images. From a distance the eye sees shades of gray, but actually only one shade of ink is used. Up close, it just looks like a bunch of dots.
That is dithered correctly. Try running it and see if you like the results. (The areas that appear black on the teal preview will not be burned. The teal colors will be burned. So you have to think of the preview as a negative of the photo.)