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It should say "BLUE BOX" with a blue background colour.
What is actually happening?
It says "BLUE BOX" with no background colour.
The issue stems from the data-v-* attribute not being re-set for the blue_block div when it is swapped to. It is still using the data-v-* attribute of the child div in the functional component. Thus the CSS class styling does not apply.
Swapping from a functional component to something else is useful. E.g. When showing a simple loading bar component before swapping to a more complex component.