Block toolbar does not render when using display: contents; on wrapping divs

This has come up before, but seems worthy of documenting via a separate issue. This behavior was noticed via https://github.com/AdvancedCustomFields/acf/issues/465#issuecomment-1251068524 and seems to be somewhat related to the discussion in core/gutenberg in https://github.com/WordPress/gutenberg/issues/7694. Also, in regards to @polevaultweb's comment via https://github.com/AdvancedCustomFields/acf/issues/654#issuecomment-1251474124, it made sense to open a new issue to keep the discussion focused.

The TL;DR of this issue is that CSS flexbox and grid don't work in the editor because WP/ACF require extra wrapping divs around nested blocks. Using display: contents; on these inner elements helps flexbox/grid to work correctly but we lose the block toolbar.

I'm not sure if this is preventable in ACF but I wanted to bring it up here to confirm. If there was a fix/workaround, then it would make many of our lives easier since we wouldn't have to battle so hard with editor styling to get our blocks to work in the back end.

The CSS we're talking about is:

.my-block > .acf-innerblocks-container,
.my-block > .acf-innerblocks-container > .block-editor-block-list__layout {
    display: contents;
}

Start by reproducing the editor behavior with the provided display: contents CSS on the wrapping elements, then review the linked ACF and Gutenberg discussions. The issue does not name files or tests; completion would require establishing whether the missing block toolbar can be prevented or worked around and documenting the result.