@Wayne-TP 

This is not what I observe, otherwise I would just return or sell all thermostats. The sound of valve closing is exactly when my current system reports "not heating" = off. And the other way around. Also I can accurately hear when the water is flowing and when it's not (or just sipping, which seems to be fine). For example, today the boiler is running for 7 hours and the radiator which should be off is a little cold to the touch (valve in "mode 2” below) exactly like the one next to it which is closed by analog means. Knowing the exact opening percentage would be nice, though.

You (TP-Link) need to understand that not everyone has constant supply e.g. from municipal heating plant. We have gas boilers, heat pumps etc. which work only when necessary. To automate our homes we need information from each thermostat if it's currently open (heat demand) or closed (even if not completely).

Basically right now there are three modes:

1. OFF in the app, effectively anti-freeze

2. ON in the app, when the measured room temperature is higher than needed and the valve is (mostly) closed. It's on standby, ready to be opened when needed. Valve must not report it's ON and "heating" when in fact it's not!

3. ON in the app and actually heating the room.

The only difference between 1 and 2 is the temperature! If you set the same value in 2 as anti-freeze, what's the difference? Only in reporting.

Also could you please confirm that my issue has been forwarded to the relevant teams and recorded as a potential bug? Again - it is illogical. Matter is in Beta so it is really important to give them feedback.

Home Assistant entities are exactly the same, just the reported state differs. Via unofficial integration it's "off" now, while via Matter it's "heat". So definitely Matter implementation in Kasa hub is causing this:
hvac_modes: off, heat
min_temp: 5
max_temp: 30
current_temperature: 20.8
temperature: 20
friendly_name: XXXXX
supported_features: 385

Similarly via "official" HA integration for TP-Link I just installed, it's "heat". But this time there's also:
hvac_action: idle
... which can be used in my automation instead of off/heat. And further confirms that Matter is broken as of now.

  @Wayne-TP Also could you please confirm that my issue has been forwarded to the relevant teams and recorded as a potential bug? Again - it is illogical. Matter is in Beta so it is really important to give them feedback.