Parsoid clients sometimes parse a fragment of wikitext during edit sessions and insert the generated HTML in the full page DOM. For this use case, it doesn't make sense to auto-generate the <references /> tag. See T95851 for an example bug report that is affected by this.
There are a couple ways of doing this:
1. Provide a new API flag. It is likely that this will always be used along with the bodyOnly API flag.
2. Provide a new fragment parse API end point that implicitly provides this functionality. This would eliminate the bodyOnly API flag since that option is also implied.
In either case, <ref> tags found in the wikitext in this mode would have their HTML inlined in data-mw instead of having an id pointer to the DOM in the <references /> section.
Option 1 is the easier path in terms of minimal disruption. Option 2. seems cleaner but requires work on the part of all Parsoid clients + a change in the RESTBase API. I've cc-ed VE, Flow, CX and Services teams in case they want to weigh in on this.