It do be making me heavily cringe.
Walking around Stormwind and randomly seeing a human male character approach some female elf character to ask about a date, get declined and throw insult at the female character IC are pretty solid evidence of a self insert and a hurt ego. It becomes especially
ad when my character talk to that female character later to ask who does that, and the player whispers me that the guy whispered some heavy insults after.
On another note:
when X character is just a Mary Sue. Oftenly Mary Sues and self inserts go hand in hand. No matter if in roleplay or stories.
Your assumption is not wrong, but be careful to downright jump to conclusions.
The question is if it’s really unhealthy or just a way to escape reality. Sadly, there isn’t a straightforward answer to this. People can roleplay, their character being a 100% self insert, yet they step away from the PC or get into a bad situation IC and don’t have any issue. Then there is the one that have a complete meltdown when you say anything against them either IC or OOC. I witnessed both.
To the example of someone playing a self insert but having no issue with accepting consequences and such on their character: I wouldn’t say it’s unhealthy. You can 100% play a self insert, if you don’t take what happens in roleplay too seriously.
The ones who self insert and then get offended by even minor things are the ones that need help. Shunning them or “haha you’re a self insert bro xddd how sad xddddd” is not a good way. Most of them have not the best life and perhaps even feel rejected from society over all. Have no achievements in real life and just feel overall sad / have mental issues.
Sure, by no means is this a “just care about them uwu” from me. It’s just an insight of how and why people do self inserts and to be maybe careful of what to say to an individual since they just might be very insecure and/or over all not happy.
“BuT wHaTs ThE pSyChOlOgIcAl ReAsOn?”
My observation is the same as you bring up. Themself + insert any random positive attribute. Playing (any) type of elf because “It’s me but pretty”, especially night elves have this problem. People like that would not play a gnome, a dwarf or anything “unattractive” to society IRL. Their vaules are “I need to be pretty”. Which often reflects in their characters speech, as well as behavior as the character has a boring and bland personality. For a character to have personality, you need IRL some personality yourself. A boring person IRL, can’t portray an interesting character in roleplay.
A character that answers with 1 word sentences, is not unlikely to have the person behind said screen also do the same in chats. Not everyone does that, but oftenly personality and roleplay, as above mentioned, go hand in hand.
A person IRL that is shy, will likely have a shy personality in roleplay plus no means to approach someone else. This is why you have so many people writing in their TRPs that “I’m shy”. That’s completely fine, it really is. It just showcases that you can’t cover certain traits.
And the same goes for the self inserts. They may be able to cover their lack of confidence when it comes to their appearance, but at some point, their problems will show.
TLDR:
Self insert bad unless it’s a goblin then good