> A hardware cursor is basically a small bitmap that can be positioned anywhere on the screen and moved around by simply updating position registers (which is normally done per mouse interrupt); the hardware draws it automatically

Do modern machines still have custom hardware for cursors? That would surprise me, as a GPU can easily blit a small cursor on top of whatever gets drawn.

The cursor plane is the way to "easily blit a small cursor on top of whatever gets drawn". If the cursor was drawn on the primary plane, the primary plane would need to be redrawn (expensive!) or repaired (messy!) to change the cursor position.