I’m really not smart enough to explain “how” mono and stereo inserts work with Cubase. But I can say this… over the years I have learned that some stereo insert effects will not sound right when you apply them to a recording being played back on a mono audio track. But you can just copy or move that mono audio recording to a stereo audio track and now that same stereo insert effect seems to work and sound fine and mono insert effects sound fine too. So I never record any audio to a mono track. Period.
Please note that when recording a mono source (like a mic or guitar) you really need to record that through a mono bus. That mono bus can be assigned to a stereo (or mono) audio track. If you record the mono source through a stereo bus, then you will probably get issues. So don’t do that.
Again, that’s just me, and as you can see and read in the other post, there are many different views/reasons for recording and not recording this way.