Popup are great! As long as they are simple and static. When you start building interactive UIs inside them, all bets are off. E.g. if you start nesting them, or add scrolling to them, and then move content underneath the mouse. Very tricky interaction that no user likes.
If there’s enough space, avoid scrolling is more important than putting currently selected option under the cursor.
Thanks @benKolyaM for the video