I`ve just bought a Tapo C235WB V2, connected it via Ethernet cable, I observe very similiar low-light issues.

The camera does not respond to any changes - Resolution / HDR / Spotlight settings do not change a thing, like there was some software problem in the phone app / firmware (seemingly latest 1.1.5 Build 250519 Rel.38908n)

EDIT: after a power cycle of the device, the "Spotlight" setting does affects the image, making dark spots brigther, very nice actually... Turning spotlight on/off generates audible "click" of the IR-cut filter (why? the full-color mode is still on manually, i don`t want it to change, I have no IR illumination), turning "spotlight" off turns the image actually into monochrome (like in IR vision). Restoring "full color" requires another power cycle :/
And again.. it fails to respond to control after some time. HDR/resolution setting still does nothing. Maybe some sequence of reboots and configuration requests will get me where I need to be.. Definitely some software issues here :(

I`ve set up also an internal, cheap Tapo C110 cam to record the exact same scene (part of some building, image enlarged, long distance, so IR off, full-color mode). 

C235WB V2 on the left, C110 on the right (much better picture IMHO).

On the left we see mainly some greatly amplified thermal noise of the CMOS sensor and huge compression artifacts (especially blurry a few seconds after keyframe, some algorithm drifts the picture away from "somewhat ok" into "cannot tell what`s that") - not what I`d expect from a "good night vision" camera.

  @Solla-topee 

This spotlight/IR-cut phenomenon was reported only as a side-note. After another reboot (or two) the camera is able to get back to full-color, I can hear no more ir-cut filter "click". My preference is to keep spotlight always on, as it gives more good than harm to the picture. I hope it can be left that way with no issues, like cpu overheating or anything. I once saw a thermopad misplaced by half of the chip size, between cpu and a tiny alluminum plate working as a radiator, in a very similar camera.

Back to the point - yes, the camera is set manually to full-color mode always (in my setup IR illumination is useless). On that config page, in the "full color" section, there is also a knob for ambient light intensity, ranges from "dark" to "very dark". It does nothing to the picture IMHO, no matter how many reboots I make. But this is also only a side-note.

My main issue is not related to spotlight or IR-cut. It is how the sensor amplification fights with compression under low-light conditions.

Shortly after a forced "reset" of image (by changing some parameter) the image is quite OK. But shortly after, noise + compression artifacts creep in blurring it beyond tolerance.

It looks like there is some colorful "game of life" being played in the frame. C110 has no such issues (picture is a bit darker, but does not go crazy like this).

My synology recorder even sometimes detects such image changes as "movement", triggering alerts, even though the camera looks at some dark, stationary wall (pictures already attached to the post above). I don`t actually use the phone app, other than for setting up some parameters. I use Synology recorder / ONVIF / rtsp:// etc..

Secondary issue is, whether "HDR" mode does anything or not.

Key question for further conversation is: if you are planning to be fixing camera firmware in any foreseeable future. If not, I`ll just try out some other cheap ONVIF camera.

I am not stating, that this camera is bad or want my money back or something. No. It is OK, it is usable. It just "goes crazy" all by itself in dark conditions.

I`ll wait for some dry night and maybe take some more pictures/clips comparing those two cameras.

EDIT: I managed to create a short animated gif showing a portion of the very same "scene", shortly after keyframe - we can see the image creeping from "somewhat ok" to blurry maze.
EDIT2: Message editor on this forum says "uploaded sucessfully".. and then does not show animated gif :(
First, middle and last frame of that gif:

.

EDIT3: After some reading I think i know why this happens. This could be fixed by adding some more configuration or "intelligence" to camera firmware. Long story short - in very low light conditions (which camera already detects, which results in very high signal amplification), noise filter and/or encoder should be parametrized differently in order to avoid such "game of life" artifacts. The C110 is not "starlight" or "night colors" camera, it does not do such strong amplification, there is no problem there.

  @Solla-topee 
 

1, 2, working on it...

3. OK, I tried the HDR feature for some time. Now the noise pattern is very different, but overall image quality is not.
a) First screenshot pair - shortly after reboot. The picture is "usable", we can see some algorithms are trying to make it better. Sometimes it freezes for a few seconds, even compression artifacts do not move. Or it reboots (audible clicks of IR-cut filter).
b) Second - after a few minutes, the c235wb picture has drifted far, far away :( No settings were touched. Shortly after the picture "resets" and synology detects "motion event" for no reason.

C110 on the right, for reference, on both pictures.