The ability to hide the mouse pointer when typing has been missing from the Wayland compositor. It was not needed in X11 as there are 3rd party utilities that could do this, but in Wayland this must be done by the compositor.
This change introduces a new setting and the ability to hide the pointer when typing occurrs.
Typing is considered to be keys that aren't modifiers (ctrl, alt, etc) and also not navigation (page up, etc).
There is a corresponding pull request to gnome-tweaks at gnome-tweaks!115