If the MIDI* does not contain any key signature events, changing the cursor position will not change the currently active key signature and the key snap dropdown will not change.
If the MIDI does contain key signature events (either because there were key signature events in an imported MIDI file, or because key signature events were created in REAPER's notation editor), changing the currently active key signature will edit the most recent key signature event, and the key snap dropdown will change if the cursor moves to a position that has a different active key signature.
If you switch to notation view, key signature change events will be notated, so you can see them and delete or edit them.
* note that key signature events may be embedded in individual MIDI events or stored at the project level, depending on the MIDI editor preference View > Notation view options > Key signatures > Key signature changes affect all tracks. The MIDI editor interacts with key signature changes the same way regardless of which way they are embedded, except in MIDI editor list view, which will only display the literal MIDI key signature events if they are stored per-track, rather than for all tracks.
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