This is a behavior change in iPadOS 26 where the floating keyboard no longer has the quick "done" dismiss button. Here are the ways to hide the floating keyboard without expanding it to full width first:
1. Tap outside the text area:
- Simply tap anywhere outside the Notes text field (e.g., tap the top toolbar or the blank area in the note header)
- This should dismiss the floating keyboard without needing to expand it
2. Use the keyboard hide button directly:
- On the floating keyboard itself, look for the keyboard icon in the bottom-right corner of the keyboard
- Press and hold that icon — it should reveal a "Hide Keyboard" option directly without needing to expand to full size first
3. Swipe down on the floating keyboard:
- Place two fingers on the floating keyboard and swipe downward
- This gesture can dismiss the floating keyboard on iPadOS
4. Use an external keyboard:
- If you have a connected keyboard, pressing Escape or Cmd+K may dismiss the on-screen keyboard
5. Report as feedback to Apple:
- Since the "done" button was removed in iPadOS 26, this appears to be an intentional design change
- You can submit feedback to Apple via the Feedback app (Apple Feedback) requesting the return of the quick dismiss button on the floating keyboard
Option 1 (tapping outside) is likely the quickest workaround for your workflow.