Yes, re-render the entire content of the Preview side. Not smart yet.
Re-rendering only the changed part would be great. I also thought that way, might take quite long time to implement it. So publish now, and improve performance later. So that I know if my solution is really needed by lots of people, before going deep. Thanks anyway :)
Judging by React Dev tools with highlighting updates, the whole app updates on keystroke. Even the logo in the top left is flashing.