I find it annoying that code that was previously perfectly-valid Python is no longer allowed. I see now that these functions were used locally-only and ignored for their presence in the class. I wonder if the Python language has an opinion on this usage. That is, I'd really like to see an upstream reference (ideally in Python and not just mypy) that clarifies why this usage is discouraged and acknowledges/justifies the weakness(es):

Functions that are used only within the scope of the class declaration and are otherwise unused/ignored after the class is constructed should be declared outside the class. Although this change violates principles of encapsulation, it's preferable to have these declared outside the class scope to avoid implying that such functions are members of the class.

On the other hand, it does appear as if staticmethod is the default condition:

>>> class Foo:
...   def bar(x):
...     print(x)
... 
>>> Foo.bar('foo')
foo

It really feels to me like mypy is broken here, and unless there's upstream guidance as to why the existing form is disallowed or discouraged, let's just suppress the mypy errors with typing: ignore.

I'm also fine keeping this suppressed in #3979 at the moment.
I will ask around in static-typing chats for opinions/clarifications as you said.

I'll close this for now, can be re-opened if reconsidered