Just recognized the same behavior with steam link on the meta quest 3. I just thought the mouse was laggy but then recognized, that steam only rerenders the image when a change is happening. The mouse cursors is either ignored or it is not enough change for steam do detect the change on the image. I could fix this by adding a short mouse shadow on windows.
This seems to be a steam issue. It surely tries to minimize the transfered bytes when nothing is happening on the screen.
proton experimentalx1 2024-04
Your system information
Steam client version:
Steam Beta Branch: Stable ClientSteam Version: 1709846872
Steam Client Build Date: Wed, Mar 6 9:28 PM UTC -08:00
Steam Web Build Date: Thu, Mar 7 10:17 PM UTC -08:00
Steam API Version: SteamClient021
Detailed information
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Smartphone information:
Please describe your issue in as much detail as possible:
I'm having trouble streaming a game from my PC to my Android phone.
The game is a visual novel and the problem is clearly visible when I have to choose a dialog option. After selecting an option using the arrow keys, the currently highlighted option on my smartphone is different from the one on the computer screen. I have attached two pictures where you can see the difference.
PC

Smartphone

The game is not from the Steam store, it's Fate/stay night [Réalta Nua] Ultimate Edition. I am using Proton to play it, as it does not have a native Linux version.
Something similar happens when I enable the "Auto Read" mode. Normally, after a line of dialog is fully displayed, there's an animated icon indicating that you need to press space/enter or click the screen with LMB to see the next line.
Icon marked with red arrow

In "Auto Read" mode, the icon is not displayed because the dialog continues automatically without any user input. This problem can occur when the line is already fully displayed, but the dialog doesn't continue - for example, because it's a dubbed line and the character hasn't finished speaking. In such a situation, the displayed line may be missing the last few characters.
This might be related to an image re-rendering issue that affects this game. When nothing is happening on the screen, the frame rate is 0 fps (the overlay shows 1 fps, but I think it's just not refreshing). Also, when I open the Steam in-game overlay, the overlay is a still image. It does not update until the game image is re-rendered. The overlay works when the animated icon is present, but the image is very laggy. I suspect that Steam's streaming backend is buffering frames as the game renders them - the FPS of the stream depends on the FPS of the game, there are no duplicate frames. Instead of showing the most recent frame, Steam Link seems to show the second-to-last frame.
I could be wrong though - I'm not an expert, so please correct me if I am. Also, sorry if my English or my writing style is bad. I am not a native English speaker so I used Deepl Write.
Steps for reproducing this issue:
I have confirmed that this issue does not occur on Microsoft Windows. I used the same game and had no problem streaming it to my phone.