This is kind of a retraction to what I just posted...
I just checked the System Settings search field after the 26.3.1 update and it's now worse.
I hadn't really looked for this bug in a while. It could be that it's been this way for more than this update. The last time I checked, the garbled text was only an issue if System Settings was launched from a notification. If launched directly from the Apple menu, then the translucency was handled better; the stuff under the search field was only slightly visible and didn't get in the way. With 26.3.1, launching directly from the Apple menu, I now see this:
View attachment 2611027
This particular bug is very minor since one would generally use the search when there is nothing scrolled under it. But, as I started to use the search and consider the impact, I saw that it would interfere if one were having problems finding an item and were trying different search terms and looking (by scrolling) at what's offered. This bug won't impact me at all.
Is it the intention of the design to show that way? That's hard to believe. Maybe the design spec doesn't specify the details and it's left to the implementor to choose the level of fading of background stuff. In that case we're left to the mercy of developers who have not been given enough guidance. Or, the design is just unfeasible and most developers won't master it. Or, it's just a bug. It is hard to know what to criticize.