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For a better context, we tried something similar with the Group block that has tagName attributes. We explored in #20218 making it possible to pick different tag names through block variations exposed in the inserter but we didn't proceed with the solution eventually, reverted code for reference:

de6b2ed

So far I have used block variations for template-parts as a way to speed up the development when I test FSE themes and for me it has worked really well.

Despite this, I think the drop down is a better solution:

• It is easy to change the element.
• The variations can be confusing for non developers, especially if a template part with the variation name "header" can be confused with selectable template parts for site headers.

I suggest the following changes:
Place the semantics under the Advanced section to avoid confusion for users who are not familiar with HTML.

Remove the word "Wrapping" and only keep "HTML element"

Instead of adding a new panel called "Semantics", can we add this to the "Advanced" section?

Instead of adding a new panel called "Semantics", can we add this to the "Advanced" section?

Done in 5f2fa20 👍

Remove the word "Wrapping" and only keep "HTML element"

Done in 1b0c37d 👍

I think there's an opportunity to further refine this with some of the component work and systems that are outlined in #27331, but so long as this is in the advanced section and is collapsed by default, seems fine to move forward with this one as a feature addition. Nice work.

I have just tested it and it work according to the latest suggestion from @jasmussen. Let's get this in 🎉

Thank you @gziolo for your testing, I'll go ahead and merge it 👍