Why does the brightness dim on iphone12 when auto is set off?

There are several features that can cause the screen to dim:

• Settings/Face ID & Passcode/ Attention Aware Features.
• Settings/Accessibility/Auto Brightness.
• Settings/Face ID & Attention/Attention Aware features (actually another way to activate the first one).
• In addition, the screen will dim a few seconds before the phone locks if auto-lock is enabled.

You also have a strange idea of what a “serious bug” is. A serious bug is a phone that crashes every time you try to access an app. What you describe is a minor annoyance.