Your question
Why is NextAuth re-rendering all my components when my browser is regaining focus. See the gif below:

What are you trying to do
NextAuth shouldn't re-render all the children components every time the browser regains focus. Below is a screenshot where the NextAuth wrapper is selected in Chrome devtools:

Documentation feedback
Documentation refers to searching through online documentation, code comments and issue history. The example project refers to next-auth-example.
Session state in v3 is updated if a window regains focus (along with some other events). If content is wrapped in a provider this will trigger a re-render depending on how you have structured your page and created your components.
A change in session state is also propagated (using events) to other windows for the site to ensure all tabs/windows are in sync and that a user does not appear to be 'signed in' when they are actually signed out (e.g. after a session has expired).
This is very much by design. SWR from Vercel has a similar functionality.
If you would like this behaviour to be optional when using the <Provider>, please do raise a feature request explaining the scenario and the rationale so we can understand how to approach creating an option for this and communicating it clearly in a way that would work for you and other users.
On the surface of it, I don't see why we couldn't provide an option to disable this feature if there was demand for it, though I'm not inclined to change the default behaviour in this case.
@iaincollins Thank you for your reply. I wanted to understand more about why this design was done. Thank you for clarifying that.
@ghoshnirmalya Thanks for asking!
It's always very useful to have questions that are very clear like this as it helps highlighting what we need to do a better job of and to question assumptions about default behaviour (both what is obvious and not obvious, as well as what is good or not good default behaviour!).