Inline Image no longer displays correctly

At some point inline images stopped displaying correctly in the editor and on the frontend.
Disabling most of the plugins did not resolve the issue. Any suggestions would be very welcome.

(The “inline image” is one of the context options for the regular Paragraph block and they typically display right along with the text at the correct image size, on the same line.)

Inside the editor: image hovers above the line after being added.

Appearance when previewing the post: a line break is automatically added in.

https://necropticon.com/musings/tolkiens-elves-are-cursed-sinners/

• This topic was modified 3 years by mila_grish.
• This topic was modified 3 years by mila_grish.

Thank you so much, Bettina! Do you think there is any way to make the image stop hovering above the line, too?

The inline image currently shows up like this:

(It’s hovering above the text line.)

But I would like it to show up more like this:

Thank you so much for your help!

• This reply was modified 3 years by mila_grish.

Even when I make the image smaller and clear cache, it still shows up like this for me… (Mozilla.)

What confuses me is that it worked perfectly and without me needing to worry about code or size just a few months ago…

That I did! Under Appearance -> Customization, where I have typically been adding it.