If you want to keep the switched-out components in memory so that you can preserve their state or avoid re-rendering, you can wrap a dynamic component in a element:

According to the docs, it should be an expected behavior, that's what keep-alive does.

I understand that the state is preserved (like all data in the component), but to me it feels a bit unintuitive that in addition to that, dynamically bound props breaks under these circumstances.

Edit: If this is the expected behavior, shouldn't there at least be away to force dynamically bound props to update themselves when a kept-alive component appears?

It looks like a bug to me. I'd expect the component to be updated when switched in.