It's been around since Lion or Mountain Lion, IIRC. There's a toggle in keyboard settings to choose between repeating or hold-for-alternate behavior (like how iOS works). The substitution behavior is the default, but if you already had repeat mode on it may have carried forward. The old way was option+e and a vowel for an accute accent mark, but I don't think that works with consonants.
Yes, I expected a toggle in the keyboard settings, but I can't seem to find one on Monterey. (What exactly is it labeled, and where located? Maybe I'm just being blind...)
The dead-keys like Opt-E for acute only work with a small set of letters in the standard US keyboard layout, although it's possible for a different layout to support more -- subject to the combinations existing as precomposed characters in Unicode. (For other combinations, you'd need to enter a combining accent after the letter, and rely on the font to supports placing it properly.)
