For example, the VS Code menu bar is broken because the drop-downs clip against the window frame, not the screen edges. The reason is different in this case, though (electron).

GNOME Files (nautilus) made the file property dialog a modal because they really want it to be centered relative to the file browser window and wayland didn't let them position or obtain coordinates.

The result is that you can't open open two file property dialogs at once (to compare sizes or dates or any other meta data, it's a common thing one might want to do).

Hopefully you'd agree that Wayland should allow apps to position windows relative to their own windows, at the very least.

With Dolphin file manager on Wayland this works for me as expected, a new window opens in the centre of the file browser window, no matter the size or position of the window. I didn't do any actual testing but I wonder what the difference is.

Making the pop-ups model has nothing to do with windows not knowing their position on screen.

It's a design choice.