Yes. Simply, a ComponentInstance can be a member of any Entities collection, so therefore it should be expected that some EntitiesObserver callbacks should fire in this case.
Ordinarily, an extension would likely try to trap this copy scenario with the:
EntitiesObserver#onElementAdded()callback,- or
DefinitionObserver#onComponentInstanceAdded()callback
(if the code was “watching” a particular component definition.)
Probably not.
Do not confound instance objects with definition objects.
A definition can only be a member of the DefinitionList collection.
I don’t know (exactly) why internally EntitiesObserver#onElementModified() fires in this Move+Copy tool scenario. Perhaps (guessing) the extra instance is first placed at the location of the existing sibling instance and then transformed along the transition of the mouse drag? (Similar to my DragTool example.)