To demonstrate the issue:
- enter insert mode, type some text, exit insert mode
- repeat step 1
- press
u to undo
- both insertions are undone
This behaviour is quite annoying, and it can even result in edits being undone in completely unrelated parts of the file, since undo stops are also not created when the cursor moves.
Also applies to situations where you insert some text, exit insert mode, do some simple editing, and then hit undo, expecting to undo your edits, but it deletes half the text you inserted as well.