It’s not really the trend in evolution/update of Desktop Environments.
Gnome particularly gets two major updates each year.
Some more conservative DEs have slower innovative pace, but a longer “keep it the way I know”, such as Mate or Cinnamon (that were forked back in the day because people did not like the change brought by Gnome 3).
It’s just that complaining that Gnome breaks habits and workflow every once in a while… Well, that’s Gnome. Had been like this back then. Will be like this later.
When you would have been using a Vanilla (default/plain) Gnome shell and upgraded it to 40 it would still be working and not be broken.
Like you, we all use extensions and themes, build by devs outside the Gnome and Manjaro team, to customize our UI/UX. These cause the breakage, Gnome nor Manjaro are responsible for your visual chaos.
When updating to 40 I turned the extensions off and used a Gnome stock app, shell and cursor themes. I rebuild my DE setup from there, to see which used external extensions and themes still worked with G 40.
Rollback to your backup or snapshot, that you would have made before your update to 40, would bring you back to 3.38, but than you cant update your apps anymore, wich is not a good plan.
I may not expressed that clearly, but the only modification I did on gnome was background image and use configuration options in settings and tweaks.I use theme available on Manjaro when I installed it originally.
I am running this config over four years, this is first time it went sour. I am not playing/tweaking with my system as it works perfectly and I am very glad for it.
I have been where you are now 3-4 years ago - I loved the gnome experience - but the constant changes drove me nuts.
As already pointed out - Gnome and KDE is reputed to break on releases.
While the Manjaro team does a good job at minimizing the impact - the upstream development by Gnome team and the KDE team - is out of their hands - they can only try to keep up.
If you want a system where you don’t have to deal with possible breaks - you will have to use components which doesn’t change.
I created my own environment based on Openbox - and I had the honor of maintaining this as a community edition until I recently - for various reasons - had to resign from that task.
Here are the things I have done, which lead to solution and perfectly working system:
setting background image back
setting again properties of dash to dock
selecting in GNOME tweaks and extensions supported theme, cursor, icons (mostly same i had before)
reinstalling X11 and xorg packages (this cleaned the mouse square cursor issue)
removed from ~/.profile some hardcoded wayland settings (I was running Manjaro when it was running on X11 by default and switched myself to wayland before this was done by Manjaro itself)
I am glad I am using Manjaro and as my thanks to this forum and people in the development of this wonderful system I am going to make donation.