The iframe behavior in WordPress 6.3+ depends on the API version of registered blocks on your site. If all blocks use API version 3, the content editor will be iframed. If any block uses API version 2, WordPress falls back to the old behavior.
All WordPress core blocks were updated to API version 3 in WordPress 6.3. However, many plugins and custom blocks still use API version 2, which can prevent the iframe from activating entirely.
This creates an inconsistent experience where some sites have iframed editors and others don’t, depending on their installed plugins and custom blocks. Understanding this dependency helps explain why the behavior might vary between installations.
The fallback mechanism provides compatibility but can mask the need to update styling approaches. Eventually, all blocks should move to API version 3 for consistency.