How to reproduce:
1. Open the “ReparentUndoBug.zip“ project
2. Press CTRL + U to open the Undo History
3. Open the “ReproScene“ scene
4. Select all Children GameObjects under “Parent“ GameObject in the Hierarchy
5. Drag them under the “GrandParent“ GameObject
6. Observe the Console and the Undo History

Expected result: The Undo History does not delete the previous Undo Stack, no error is thrown in the Console
Actual result: The Undo History is deleted and replaced with “SiblingIndex Change“, and an “Action caused undo stack overflow. Some undo information may have been lost” error is thrown in the Console

Reproducible in: 2023.1.0a16, 6000.0.59f1, 6000.2.7f1, 6000.3.0b4, 6000.4.0a1
Not reproducible in: 2023.1.0a15

Reproduced on: Windows 11 Pro (24H2)
Not reproduced on: No other environment tested

Notes:

Each time the GameObjects are reparented, the Editor freezes for a few seconds
Does not reproduce if the GameObjects are unparented completely, only reproduces when the GameObjects are parented to their Grandparent or a higher-level parent (Parent → Grandparent → etc.), and does not reproduce if the GameObjects are parented to a lower-level parent (Grandparent → Parent → etc.)
When at least 627 GameObjects are selected and reparented, the Undo History will clear and display “SiblingIndex Change“ as the latest action. Undoing that action will cause ~625 GameObjects to stay parented to the “Grandparent” GameObject, while the other 2 are successfully undone and reparented to the “Parent“ GameObject. The number of failed undo reparentings depends on the number of GameObjects selected
The error is thrown inconsistently, so it might not be thrown on the first reproduction attempt. Increasing the number of GameObjects selected increases the chance of the error being thrown (if enough GameObjects are reparented, the error will be thrown multiple times)