How to change the canvas size without stretching
Canvas Size in Paint by Zaweba (Ctrl+Alt+C) adds or trims space around a picture with an anchor and a fill colour, leaving the picture itself unchanged.

Change the canvas, not the image. In Paint by Zaweba, Image > Canvas Size (Ctrl+Alt+C) makes the area around the picture bigger or smaller while the picture stays exactly as it is. You choose an anchor, which decides where the existing picture sits in the new space, and a fill for any space that is added.
The difference between image size and canvas size catches many people out. Image Size resamples the picture, squeezing or stretching the pixels. Canvas Size adds or removes space around the edges and leaves the pixels alone. If your picture got distorted when you only wanted room around it, Image Size was the wrong command.
Step by step
Open the picture and choose Image > Canvas Size, or press Ctrl+Alt+C. Enter the new width and height. Enter bigger numbers to add space, smaller ones to trim.
Pick the anchor. Leave it in the centre to add space equally on all sides, which is right for a border. Click the top middle to keep the picture at the top and add space below, handy for adding a caption strip. A corner anchor adds space on two sides only.
Choose the fill for the new area and apply it. The picture keeps its exact size and sharpness, and only the frame round it changes.
Jobs it is good for
A plain border is the simplest: add the same amount to width and height, anchor in the centre, fill with white or a colour. For a print look, add a slightly deeper margin at the bottom by doing two steps, first the even border and then a little more below with the anchor at the top.
Making a square from a portrait photo for a social post is another common use. Make the width equal the height, anchor in the centre and fill with a colour sampled from the photo, so the bars blend in.
Adding room for text is a third. Extend the canvas on one side with a plain fill, and you have space for a heading without covering the photo.
Trimming
Smaller numbers trim from the edges according to the anchor. That's a precise way to remove exactly a set number of pixels from one side. For trimming by eye, the Crop tool is usually easier, since you can see what you're keeping.
Getting a good result
When you need empty space that isn't a flat colour, extend the canvas and then fill the new area from the picture itself. Edit > Smart Fill rebuilds an area from its surroundings, and it can make a beach or sky photo wider in a natural way. It works best on simple textures like sand, sea, grass or cloud.
Think about layers, too. If you want a coloured border you can change later, put the colour on a layer of its own below the photo after extending the canvas. Then a different colour is just a change to one layer.
Image Size and Canvas Size together
The two often work as a pair. Resize the picture first with Image Size so it's the right width, then use Canvas Size to frame it or bring it to an exact shape. Do it in that order and you won't stretch anything. In Paint by Zaweba both are in the Image menu, side by side.