It does just seem to be what the smaller Daikin units do, especially at lower power input levels.
Its the input power which varies, which in turn causes the LWT to fluctuate. You never see the variation on the RWT because the water becomes too mixed as it moves around the central heating circuit.
I have a theory that the compressor speed (or input power maybe) is variable, but in fixed increments. When the input power fluctuates between two levels it is achieving an average power between its two fixed power levels by pulse width modulating between them, but that is just a theory.
COP is generally good so it just appears to be how they work. If you didn’t have monitoring you would never notice it.