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To turn off overtype in Notepad in Windows 11/10, press the Insert key, and you'll switch back to Insert mode where your text behaves normally.
Thankfully, you can still re-enable the old version of Notepad by opening the Settings App (press Windows+i) and navigating to Apps > Advanced App Settings > App Execution Aliases ...
Each use of AI in Notepad and Paint in Windows 11 chews up a credit from a Microsoft 365 subscription.