This is WordPress 6.4.3 bug, with this changeset: https://core.trac.wordpress.org/changeset/57388. There is a bug fix and core trac ticket to follow about this issue here: https://core.trac.wordpress.org/ticket/60398. This issue will be solved in WordPress version 6.4.4 but before it’s release, you can simply install “Force using PclZip” plugin and then all the zip installation will work normally.
1. Download the plugin zip file from https://github.com/aaronjorbin/force-pclzip/archive/refs/tags/0.1.zip
2. Go to “Plugins => Add New => Upload Plugin”, then browse and locate the plugin zip file you have downloaded
3. Click on “Install Now” and then Activate the plugin.
After this, you can upload the theme zip file from “Appearance => Themes => Add New => Uploads”