All right, this is going to be fun. It is moments like this when I regret I don't have a blog.
The problem was multi-dimensional. First of all, I noticed that when using smallcaps in Typst, Polish letters with kreska (e.g.,ó, ś, ć) are inappropriately rendered / synthesized / had incorrect glyph mapping.
They just looked scaled-down in a very peculiar way.
The strangest thing was that it didn't look as bad when I was not using lang: "pl". It seemed like choosing to use Polish settings caused the very Polish words to be rendered weirdly.
I checked against TeX (LuaLaTeX) with the same font (MB Type fonts library) and it didn't look bad. At first, it looked correct.
But it wasn't.
Turns out Polish kreska is not the same as acute accent. It has different typographical guidelines. I did not know that, despite being a native Polish speaker for almost three decades.
MB Type wanted to accommodate those typographical guidelines. It had rules for Polish glyphs. But it had a bug where they would render incorrectly.
Not being aware of the difference in rendering between kreska and acute, I assumed that the consistent output of TeX meant it was a Typst problem. It turns out that is not the case. Typst does the correct thing. TeX does not. TeX, even with \usepackage[english,polish]{babel} and \selectlanguage{polish}, does not use the (now fixed) correct glyphs.
I contacted Matthew Butterick (author of MB Type library) and after getting to the root cause, he updated his entire library, which now behaves correctly with Typst.
But it does not behave correctly with TeX.
I wonder if I am using it incorrectly, or is Typst simply superior in this regard.
Below I attach two screenshots. Pay attention to the accent above Ś and Ć in the first row compared to the rest of them. I also attach TeX and Typst code: