We determined that it wasn't just the pen, but also drawing with finger or mouse with the black solid pen and the yellow highlighter. the problem does not occur with the rainbow pen (from the drop-down list), or he pencil. The problem is not just limited to Office apps, with the yellow highlighter in Snip & Sketch also causing flashing.
I have a case open with Microsoft now (119112823000292). If you have logged a case, can I please get the case number so we can link them up?
Also, if you are having the issue, can you please report your device model, display adapter model and driver version, as well as Operating System, so we can get a better picture of what it is, and what it isn't?
For us, we are having the issue on Surface Pro 7 (Iris Plus graphics), version 25.20.100.7101 (and I also tried 26.20.100.7584 from the Intel site), running on windows 10 64-bit, version 1909.
As a troubleshooting step, the support rep got us to downgrade to the Microsoft Basic Display Adapter (by uninstalling the device and deleting the drivers). That made it work.
We also had failures watching videos in YouTube in Edge: "An error occurred. Please try again later", which was resolved by reverting back to the Microsoft Basic Display Adapter. There is definitely something wrong with this driver.
It's not an interaction with other non-Microsoft software, as it persists with a clean boot (https://support.microsoft.com/en-us/help/929135/how-to-perform-a-clean-boot-in-windows).
We are not experiencing the issue on a Surface Pro 5 running Windows 10 1909 with Intel HD Graphics 620 drivers (both versions 25.20.100.6472 or 25.20.100.7101)