The fact that the archived thread is from 4 years ago tracks: it’s definitely been my experience (I’ve been playing The Sims 4 since February, 2020 on PlayStation 4 Pro and PlayStation 5.)
This bug is very random, but it seems to be more prevalent in cramped environments (though OP’s screen grab shows plenty of space). Methinks the Sims try to position themselves properly for some interactions (this is very easy to notice with the Kiss in Water one), but there seems to be some sort of deadline that once expired will trigger the animation no matter where the Sims are, hence the weird arm stretching — the game acknowledges that hands should go towards the back of the other Sim, but are limited by the length of the arms (I’d say it’s inverse kinematics).
Arms going backwards, though, would seem an issue with the coordinates, maybe? Like, the game tries to calculate where hands should go and it returns an invalid (negative?) integer, then the inverse kinematics goes bonkers.
On a related note, maybe it’s not a deadline, but a bad set of coordinates? Like, the Hug interaction needs positioning, so the game checks if the Sims are in valid positions — if YES, trigger animation; ELSE, route to valid coordinates. For some reason the game goes “Whatever, the coordinates are valid” and we see borked hugs.
It’s not just hugs, though: after 2.292 hours (checked just now on my PS app), I’ve seen all kinds of interactions with weird arm movements. Hug, Kiss, Suave Kiss, Embrace, Passionate Kiss… you name it. Whenever an interaction requires positioning, it can go wrong. Though I’d say Hug is one of the worst offenders.