This is how Arc behaves by default, and it drove me crazy. The cons of it appearing when I don't want it far outweigh the pros of saving me a single click when I do want it.
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Picture-in-picture is one of those things that should only happen when I explicitly ask for it, in my opinion.
Love it a time saver.
Personally, I like it. Usually I will have something playing, music or the like in another tab or will have multiple media tabs, so I will have a small PiP on the bottom right hand side, makes it easier to manipulate on the fly. Alternatively, I will just push the tab with the screen onto the sidebar, since this is what I did before this option became available.
I just want the damn keybinding to work on my non US/UK keyboard:
There's many users who would kill to have this feature from Arc, just let you know. It's innovative, that's why it should be an option for people who want it, it needs to be polished though, like not popping on no audio videos and a soft-whitelist.