Also note that undo doesn't seem to work on this deletion event.

I think this might be the same bug that I encountered last night. Details and a screenshot at https://en.wikipedia.org/w/index.php?title=Wikipedia:VisualEditor/Feedback&oldid=564667549#Indentation_with_colons_rendered_with_blank_lines._Attempting_to_delete_these_deletes_entire_section_and_cannot_be_undone

Summary: Indentation with colons is rendered in VisualEditor with one blank line per level of indent before and after the indented section. Attempting to delete one of the blank lines before the indentation unindents by one level and removing a blank line before the indented text but not removing any after it.

Attempting to remove any of the blank lines after the indented text deletes the entire indentation section. This deletion cannot be undone.

Testing at https://en.wikipedia.org/w/index.php?title=User:Thryduulf/sandbox&oldid=570858997 shows that attempting to backspace on one of the trailing new lines no longer deletes anything, it just moves the cursor to the end of the line above.

This seems fixed now. I was able to backspace or delete anything around the indentations on the test pages without the editor exploding in my face.