Me too. I thought refs these days are told to allow plays of that nature (razor-close offsides, etc) to play out and VAR can address it on the backend.
I think that's typically the plan, but the problem with that is that the VAR then has to have evidence of a clear and obvious error to overturn the call. Even with AI VAR technology it's not always that clear and obvious with offsides. I'd rather the referees call the game as if there were no review options and just call it like they see it. If they screw something up VAR can overrule them, but don't leave your flag down if you think you saw offsides. Don't swallow your whistle if you're pretty sure you saw a foul in the box. Grow a pair and blow your whistle.
In this particular case I'm pretty sure he was off. I don't think extremities like arms count within the laws as body parts that can make a player offsides. My understanding is that the torso (up to and within the shoulders) is what matters. In this case the shoulder is clearly beyond the rear edge of the defender's torso, which makes him offsides.
I could be wrong on that understanding of the rule b/c it's been tweaked so much over the years as VAR technology evolves, but I'm fairly certain that's how they look at it.