FWIW, the result of bisecting the commits points to r37944 (0d613e3).
I was able to recover from the bug by adding back the previously removed call to post_connect:

--- a/ncat/ncat_connect.c
+++ b/ncat/ncat_connect.c
@@ -1138,6 +1138,7 @@
         /* Create IOD for nsp->stdin */
         if ((cs.stdin_nsi = nsock_iod_new2(mypool, 0, NULL)) == NULL)
             bye("Failed to create stdin nsiod.");
+        post_connect(mypool, cs.sock_nsi);
     }
 
     /* connect */

However, TLS over proxy does not work.
I am not familiar with this area of the code so I cannot help with troubleshooting it further.

I can confirm the same issue on 7.91 on Linux(Gentoo). i.e. the following works in 7.80 but not in 7.91:
ssh -o ProxyCommand='ncat --proxy <sockshost:port> --proxy-type socks5 %h %p' me@inside.host
Patching in the single line identified by @nnposter above - does indeed get ssh-over-socks5 working again.

I can confirm the same issue on MacOS Big Sur (v11.0.1). Reverting to 7.80 didn't work either since it results in this issue.

post_connect() is called in connect_handler in the SSL case, which is what I was testing with. I neglected to test the non-SSL case, apparently. Fix incoming.

When will the fix for this be released? Do I understand correctly that right now there's no working way to proxy SSH over SOCKS5 with authentication on Big Sur? Old Ncap versions don't work because of #2079. New Ncap versions have this issue.

Is there a workaround other than manually compiling latest sources? Thank you.

Arch Linux - same issue - 7.91

workaround - use nc from openbsd @yyy

Now it works fine after update to 7.92