In a VM guest, the resolution of the virtual monitor in X changes dynamically with the VM window size. The same works with gnome-shell using wayland. It seems like this is implemented using DRM hotplug/udev change events, which kwin seems to use only for adding and removing outputs.
This should work, the drm backend reloads output modes. Reopen if the issue is still present in 5.26 or 5.27
Yep, just doesn't work OOTB because of https://bugs.kde.org/show_bug.cgi?id=455992...