For me on KDE, it's in Settings >> Appearance >> Cursors. see screenshot

No, no. I meant that it's only happening in the Firefox window, it's normal outside of it. I've also noticed that, now, Firefox's alert windows look like the ones that run in Wine... Could it be because of the autoupdate installing a windows version or something?

It's still an OS or Desktop theme issue, not a browser issue. Play with the themes and see if it works. What OS? What Desktop? X11 or Wayland? I've seen this issue before in KDE and after playing with either the theme and or cursor size it was okay.

I have latest Garuda Linux with Wayland, I don't know what do you mean by the desktop though?

I decided to remove it altogether (I installed it manually) and then reinstall it with a package manager which rolled me back to version 120 but for Garuda Linux and everything is back to normal. I'll leave it like that for now cuz everything works.

Missing out on critical security fixes is not a solution. Try setting the environment variable MOZ_ENABLE_WAYLAND=0.

Alright, since the Garuda-dedicated Firefox also got updated to 121, I had to find a solution again. Through many other posts on different sites, I found this: https://wiki.archlinux.org/title/Cursor_themes and there specifically this: "KDE (Wayland) xdg-desktop-portal-gtk must be installed for GTK/Gnome applications to correctly apply cursor themeing on Wayland." And so I installed xdg-desktop-portal-gtk through Octopi, relogged and now cursor is normally themed and sized.