Android 16 introduced translucency to the notification shade and Quick Settings last year. As rumored, Android 17 Beta 3 continues that blur trend.
The background of the widget picker switches from a solid color to a blur. You can make out your homescreen and app icons. This effect applies to the per-app sheet and full list.
Beta 2 vs. 3
There’s also a blur effect when you launch apps. This might be hard to notice or appreciate since the app launch transition from icon to full screen is pretty fast. Pay attention to how your wallpaper is now blurred as the app takes over the entire screen. In previous releases, the background is unchanged.