I was screen sharing with another Mac, and I could see the normal mouse arrow pointer, but I couldn’t move it. When I moved my mouse around, it appeared as a magnifying glass, and I couldn’t click on anything.
I tried searching for answers and found some suggestions to reset the System Management Controller (SMC) but that seemed to be a slightly different issue that did not involve screen sharing, so before I did anything so drastic, I wanted to try some more things.
I started going through the screen sharing settings, and I noticed in the upper left corner of the screen sharing window (beneath the top menu but above where you can see the shared screen), there’s a Control menu with two icons. The one on the left was an arrow mouse pointer with some arcs going around the left side, and when I hovered over it, the tooltip read “Control Mode”. The one on the right was a pair of binoculars, and the hover tooltip for this one read “Observe Mode”. The Observe Mode was darker grey, which means it was selected, so I clicked on “Control Mode”. The magnifying glass disappeared, and I was able to control the mouse again.