useEffect Hook Example: What causes the re-render?

I'm going to do my best to explain(or walk through) what is happening. I'm also making two assumptions, in point 7 and point 10.

1. App component mounts.
2. useEffect is called after the mounting.
3. useEffect will 'save' the initial state and thus counter will be 0 whenever refered to inside it.
4. The loop runs 3 times. Each iteration setCount is called to update the count and the console log logs the counter which according to the 'stored' version is 0. So the number 0 is logged 3 times in the console. Because the state has changed (0 -> 1, 1 -> 2, 2 -> 3) React sets like a flag or something to tell itself to remember to re-render.
5. React has not re-rendered anything during the execution of useEffect and instead waits till the useEffect is done to re-render.
6. Once the useEffect is done, React remembers that the state of counter has changed during its execution, thus it will re-render the App.
7. The app re-renders and the useCounter is called again. Note here that no parameters are passed to the useCounter custom hook. Asumption: I did not know this myself either, but I think the default parameter seems to be created again, or atleast in a way that makes React think that it is new. And thus because the arr is seen as new, the useEffect hook will run again. This is the only reason I can explain the useEffect running a second time.
8. During the second run of useEffect, the counter will have the value of 3. The console log will thus log the number 3 three times as expected.
9. After the useEffect has run a second time React has found that the counter changed during execution (3 -> 1, 1 -> 2, 2 -> 3) and thus the App will re-render causing the third 'render' log.
10. Asumption: because the internal state of the useCounter hook did not change between this render and the previous from the point of view of the App, it does not execute code inside it and thus the useEffect is not called a third time. So the first render of the app it will always run the hook code. The second one the App saw that the internal state of the hook changed its counter from 0 to 3 and thus decides to re-run it, and the third time the App sees the internal state was 3 and is still 3 so it decides not to re-run it. That's the best reason I can come up with for the hook to not run again. You can put a log inside the hook itself to see that it does not infact run a third time.

This is what I see happening, I hope this made it a little bit clearer.

I found an explanation for the third render in the react docs. I think this clarifies why react does the third render without applying the effect:

If you update a State Hook to the same value as the current state, React will bail out without rendering the children or firing effects. (React uses the Object.is comparison algorithm.)

Note that React may still need to render that specific component again before bailing out. That shouldn’t be a concern because React won’t unnecessarily go “deeper” into the tree. If you’re doing expensive calculations while rendering, you can optimize them with useMemo.

It seems that useState and useReducer share this bail out logic.

setState and similar hooks do not immediately rerender your component. They may batch or defer the update until later. So you get only one rerender after the latest setCount with counter === 3.

You get initial render with counter === 0 and two additional rerenders with counter === 3. I am not sure why it doesn't go to an infinite loop. arr = [1, 2, 3] should create a new array on every call and trigger useEffect:

1. initial render sets counter to 0
2. useEffect logs 0 three times, sets counter to 3 and triggers a rerender
3. first rerender with counter === 3
4. useEffect logs 3 three times, sets counter to 3 and ???

React should either stop here or go to an infinite loop from step 3.