Standard user behavior (even in such a simple platform) is ability to resize text boxes by both width and height. Feels very limiting right now and as you add more text boxes, you end up with a lot of overlapping boxes because the height can’t be resized after creation.
Text boxes can be vertically resized using the keyboard shortcut
However, I do agree that resizing text boxes using a mouse results in some unexpected behavior regarding the height of the text box.
Stretching the width of a multiline text box does not cause text box to “hug contents” and instead maintains the original height of the text box regardless of how many lines of text are being displayed.
Stretching the width of a multiline text box should cause the text box to “hug contents” (similar to auto layout text in Figma). As the number of lines decreases, the text box should get shorter to match the height of its content.