losing contact names in text messages on iPhone 14 Pro

Since updating to iOS 16, when I am sending an iMessage to one of my contacts and type their name in the message by selecting the middle predictive text choice (see the screenshot with the three suggestions shown in the predictive text area). Their name (in the text body of the message) changes to blue and the recipient tells me it is blue when they read it. I cannot for the life of me understand what this feature is or what it is supposed to be for, and wondered if it’s possible to switch this feature off. I know it’s only started happening with iOS 16.