When 'Auto Resize' is turned off, modal scrolling is (now?*) disabled, which makes it impossible to work with block configuration modals that have enough options to make them taller than the browser window.
* - The option's text suggests that this was supposed to be the case for quite a while now (years, perhaps - I haven't dug back to see when the option text was last changed). However, I know that scrolling still worked even with 'Auto Resize' disabled as recently as Drupal 10.1.6. I have a strong suspicion that something in Drupal kept the code disabling scrolling from working up until Drupal 10.2, and then it suddenly kicked in and started functioning as intended. Unfortunately, that brings out the issue I'm describing here.
Set up a block type with enough fields / options to make the configuration panel taller than your browser window, then disable the 'Auto Resize' option in Layout Builder Modal. Go into Layout Builder and try to add or edit a block of that type and note that the options extend below the visible window, yet you cannot scroll down to get to them. (You can tab down, but that's an awkward method at best.)
While the quick fix for users is to (re)enable 'Auto Resize', and that might work for 95+% of the use cases, if the option still needs to be there for some reason, then it should be changed to keep scrolling active regardless of the setting, to ensure that overly tall block configuration panels can be fully accessed at all times.
Active
1.2
User interface
So glad I found this issue documented. I was going nuts trying to figure it out as this issue came up for us recently as well. We had no idea what was going on and we were thinking there was some CSS mistake that we made somewhere. We have 40+ websites that use this feature and after updating and having this issue, we'll need to go in and adjust configuration on all of them to get it corrected. Just glad to have found what the problem is.