Upon further investigation, it's clear that this rotation issue is caused by the "Hide camera cutout" choice in Settings, Display, Camera cutout, for the main screen of the Z Fold7.

The "Hide camera cutout" is new on the Fold7.  The Fold6's main screen had an under-display camera and did not support hiding the cutout.  When this new setting is chosen on Fold7, it causes incorrect inset values to be sent to apps upon screen rotation, which in turn cause apps' layout to be incorrect.

Moreover, this causes more than just taskbar overlays: it can truncate entire sides of apps.  Attached are two screenshots for an app with "Show camera cutout" chosen and three with "Hide camera cutout" chosen.  As shown, the latter causes general layout problems in the app, which can only be worked around by app restarts or showing the cutout.  Phone restarts do not help.

Please fix this bug.  It's causing layout issues in apps run on the Fold7's main screen whenever users set "Hide camera cutout".