We've run into the same, filed a radar: FB16087048 The ScrollView also seems to be important - if you remove the ScrollView then the button doesn't engage as the sheet begins to drag. Also, List doesn't seem to demonstrate this behavior.

Important to note - the new automatic tracking features are specific to @Observable. When the presenter says "Observable objects" he's referring to "classes that use the @Observable macro", not "classes that conform to ObservableObject". I verified in a sample project that updates are not triggered for models that conform to ObservableObject.