Whether this is 'normal' or not I can tell you its common enough where you 100% need to strictly use your business laptop for business needs, no exceptions. You can have no expectation of privacy on a company laptop and should proceed as if someone somewhere is reading every keystroke you make.
Your questions are two different topics. Everyone at a minimum tracks login activity. They’d be dumb not to.
Yeh def they log something, Better layoffs mentioned some employees working just 2-3 hours, surely that’s based on that. But loggin key strokes is insanity!
I don’t even think it’s very easy to do. Never heard of this before. If someone is able to get his deliverables on time without a lot of keystrokes, then it’s great. A company gets what it rewards. If they reward output, then people will give more output. If they reward activity, people will just be more active and pretend to be busy.