Ryan Cristoffel, writing for MacStories:
Rather than simply copying the Mac’s own cursor implementation, Apple has designed something new for iPadOS. Beyond the simple aesthetic change of the cursor being a circle on iPad rather than a pointer, iPadOS’ cursor also adapts to different types of content: when hovering over an app icon on the Home screen, the cursor doesn’t actually sit above the icon, rather it merges with the icon such that the visual circle disappears, and your movement of the cursor is reflected in the icon itself moving around. Similarly, in the case of certain other UI elements the cursor merges with those elements while hovering over them.