When using “multi-cursor mode”, I suspect many users like me want Cursor Tab to get out of their way. With multiple cursors, Cursor Tab gets in the way and is confusing.
When the editor has multiple selections/cursors, VS Code applies the editorHasMultipleSelections context - this can be used as a “when expression” in keyboard shortcuts. Hopefully that helps.
The ideal UX would be a dropdown under “Cursor Settings > Features > Cursor Tab” called “Trigger when multiple selections” with options “enabled”/“disabled”.
Currently I find myself disabling Cursor Tab entirely then re-enabling it.