I really enjoy this as a feature. There are many times that I don't need a video full frame, but don't want to see the rest of the website page either (I'm looking at you YouTube). I can just pop the video out, and even shrink its size, and then go back to whatever else I need to be looking at.
Sadly, there are so many videos out there that do not need to be videos, yet that's how they are presented for sometimes rational reasons on the "creator's" part.
I managed to somehow disable the button that appears on the video without totally disabling the feature. I find it a lot more ergonomic to hit ctrl+shift+] to toggle it.
I pretty much only use it for videos yt-dlp + mpv can't open though.
I disliked it because when I click on another link I expect to see the new webpage and nothing else. Instead, I have the video continuing playing on the side so I have to manually close it aswell. That combined with the video player taking up unnecessary space for me, it's even worse on the phone, some picture-in-picture players eat up 1/4 of the screen.
That only affects the controls of the PIP mode, the question was how to completely disable PIP mode. A sibling comment posted a about:config setting to do this.