Vlad I think that a compact mode in a browser is primarily about tradeoffs. You get more real space to show the actual page, but you need to give up some functionality of the top bar. When only 5 tabs are open, then your proposed solution is the perfect compromise, you get a static, visible URL bar and you can read titles of all your tabs too.
But quite often I have more tabs open. Because many of them have the same base URL, I can't differentiate them just by the icon so I check the setting to always show tab titles. In Safari that gives me 8 visible tabs on my Macbook Air.
I find this good enough. It lets me have a couple of github repos open, some docs and some stackoverflow pages.
Your proposed solution takes up about over a quarter of that space. I shrunk my Safari window to "simulate" it.
I get at most 6 visible tabs, which would be a serious hit to quckly switching to the tab I need. In return I can see more of the URL of the page of my currently active tab and I have URL bar that doesn't move around.
As per my previous post, I very rarely need to examine the URL past the TLD, so I gain negligible value here. And if my workflow did involve frequent URL viewing or editing, I still wouldn't be able to see the full URL in the bar you proposed for many webpages.
Safari, with its hybrid tab/url, let's me see 24 characters of the URL in this instance:

In your example, the URL shown is 16 characters long and the bar could probably fit twice as many, so 32. A 33% improvement over Safari (also, in your demo, 8 characters, so around a quarter of the URL bar, is taken up by the https://
. Seems redundant given I can see the lock icon. Safari does not show it.). The website I'm on right now, https://orionfeedback.org/d/92-compact-tabs/82
is 46 characters, so I couldn't see the number of the reply, which is at the end of the URL, in either case.
The other benefit of your proposed solution is that the URL bar stays in one place as opposed to jiggling all over the tab bar. It's certainly nicer having it be static, but it's really not a big deal for me since I almost never click on it anyway, just CMD+W, CMD+T and enter the URL like that.
So yeah, your proposed solution does look really slick and I'm sure a lot of people would love it, but for me and other people with similar workflows, it makes a much worse tradeoff compared to the Safari 15 implementation when it comes to productivity.