That looks like the front-end processor window for some non-Roman scripts. This gets pretty far into the weeds if you don't normally use them, but in case you're curious:
With a writing system like Japanese, you type using English characters to produce phonetic Japanese characters, and then convert those into ideograms. For the most part, this happens "inline", that is, right where the cursor is, wherever you'd be typing if you were typing in English. Back in the old days, however, it happened in a separate window (the FEP window), and once you had a chunk of text composed in that, you'd send it to the main window.
I use Japanese on my system. The FEP window still exists, and every once in a while it will pop up for a second—then the system seems to get its composure back and I go back to inline typing. I'm guessing that you're trying to produce a character that involves multiple keystrokes, like ü, and somehow that's invoking the FEP window. I can't say why it's happening or how to stop it, but in my experience it is harmless.