For this case I've also been on the phone with support for a while, friendly support asked me to additionally ask the developer community about this:
Open Terminal.
Execute sudo du -hd 1
type wrong password, hit enter, immediately type again wrong password.
There should be a number of characters now between the prompt "Password" and "Sorry, try again" - which are potentially parts or even your whole password characters.
I've tried this on 11.1 BigSur, Support tried it as well on his system with similar results. We were not able to find out why, but definitely reproducible. Worked also with other sudo commands.
As a user I expect at no point to have any password characters revealed. Did anyone else notice this?
An exerpt of my Terminal:
$ sudo du -hd 1
Password:
asdasdasdasdasdsadadasdsaSorry, try again.
Password:
asdasdsadadsadsadasdsadSorry, try again.
Password:
adasdsadassudo: 3 incorrect password attempts
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