Context
This is happening when editing content.
Questions
Is this related to the AI assistant feature?
How do the available wrappers and separators work?
Does drupal use the older/outdated dll setup?
Discovery
shouldNotGroupWhenFull setting might be relevant.
When no separator/wrapper is added:
The toolbar buttons that don't fit the user's browser window width will be grouped in a dropdown. If multiple toolbar rows are preferred, those can be configured by adding an explicit wrapping breakpoint wherever you want to start a new row.
Resolution
The issue is with the flex containers used in the layout, which somehow allow items to overflow. Fixed by setting max width 100%.