There's an ambiguity here, but I don't think it's a bug. You're actually pasting text into a container that is red.
Before you do the paste, you can see that your cursor is blinking red and if you typed, it would have been red. This is because you were at the end of a line with formatting and that formatting continued onto the next line automatically. Your paste happened inside that formatting as it's where your cursor was.
"As designed" isn't really correct as it's more of an incidental behavior and is mostly controlled by the browser I believe (it's how the formatting needs to be brought across, which is correct more often than not).