As discussed in this community thread, TinyMCE 7 changed the default value of the paste_data_images option to true:
https://www.tiny.cloud/docs/tinymce/latest/copy-and-paste/#paste_data_images
This change allows users to copy and paste images directly into the editor. While the pasted image appears correctly in the editing form, it is broken or missing when viewing the rendered content.
This can lead to a poor user experience and confusion, as users might assume the image was successfully saved.