This conversation has been merged. Please reference the main conversation: Photoshop 21.1.1: problem changing canvas size inside the smart object ruins the smart object
1. Open a photo in Photoshop 21.2 on Windows. For example this one:
2. Convert the image background layer to a smart object
3. Resize the smart object proportionally. As an example, the document would now look like this:
4. Open the smart object for editing. Enlarge its canvas size on one axis (either width or height), then save. The contents of the smart object would look like this:
5. When returning to the parent document, notice that the image has been squashed, keeping the size of the previous smart object:
This did not happen in previous versions. I can confirm it did not happen in Photoshop 21.0.3.