Recently, someone asked me again what exactly is being "earned" from LST and re-staking.

Honestly, the core of LST's returns is still staking rewards plus someone willing to pay you a liquidity premium; re-staking is more like taking the same sense of security and using it to sign multiple IOUs, with most of the profit coming from project subsidies, reward pools, or you helping others shoulder some tail risk.
The risks are also straightforward: contract issues, penalties/slashing, inability to withdraw liquidity, price decoupling from the peg, or even the more layers there are, the easier it is to overlook a link.
Some people treat on-chain data tools as gospel, I look at them too, but don’t trust them too much—be it lag or misguidance, in the end, you still bear the consequences.
Thinking about it later, it’s quite funny; I used to think "layering more makes it more stable," but now I just try a small position, take profits gradually when I earn, and keep the keys in a cold wallet for peace of mind.