Bizarre activity of the VU meter VS playback volume

Yes that’s bizarre.
Another bizarre thing is that there’s no recording device showing.
Does this have anything to do with the automatic-gain-control you were making? (https://forum.audacityteam.org/t/how-does-audacity-control-the-mixer-volume-on-the-computer/50360/1)

Also strange how your version of Audacity looks like it’s running on Windows (this is the Mac board). Was that unintended or are you running Audacity in Boot Camp?