On earlier iOS versions Live Activity displays correctly according to mode set.  Can't find an opened issue for that version: iOS 26 device: iPhone 16

While the activityBackgroundTint modifier is intended to set the background color of a Live Activity, it often fails to dynamically update, leaving the activity with an incorrect background. Replacing it with ZStack { Color(.background) .... } solves the problem, but this is a workaround. The activityBackgroundTint modifier is still needed, at a minimum, so that the "Allow Live Activity for the app" extension does not have the default color.