How Do I Fix This

A wheel spacer... I'm interested in hearing more about that. In my mind I see a wheel spacer pushing the wheel (hub center) outwards. How does that work to create more space between the tire and quarter panel? Thanks

A spacer will push the wheel further out to the quarter, that's how that works. So for your case it won't work. If your clearance issue was to the springs a spacer could help you, but again that's the kind of thing you do if you're off by an 1/8" or a 1/4". Not the thing you do when you're off by 1.25"