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Determined Fish ok, so I was able to reproduce on an M1 MacBook Air with just any old USB RF mouse. The screen resolution has to be above a certain threshold to show it easily (but 2560x1440 was enough). It did not reproduce with the Magic Trackpad over USB, so it must be something to do with mice specifically. This wasn't an expensive mouse with a high refresh rate, just a cheap mouse TL;DR it's not you!
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Bored Leopon Determined Fish Wild theory based on a bit of experience working with USB HID input: Newer mice have something like a “high precision“ mode and a “low precision” mode for big and small movements and when the screen resolution is high enough, macOS gets confused between the two trying to map your big and small movements to screen pixels. Something like this is the only way I can explain the dramatic window jitter despite what appears to be a fairly smooth drag movement in the video…
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