I wonder if the SD card playback allows the stream to be variable quality, while the Live view only streams at whatever you set in the upper left of the live stream. If you set it to HD, maybe it tries to force HD and will just buffer and freeze if it can’t handle it, while the SD card allows it to change the quality of the stream to fit the network need…if the connection is weak, then it might scale down. This seems to fit with the quality of some of my recordings that seem to have a little variation sometimes.
We assume it streams the same as the live stream, but maybe that’s not the case.
We have been told that Wyze cams have at least 2 different streams that are used. In the following post, the employee was explaining that Apple denied Wyze’s Homekit application because the second stream is only 360p, and Apple required the second stream to be 720p.
The relevant thing for my thought-train is that there is more than 1 stream for video. Even if you have it set to HD or whatever. I do not fully know what the purpose of the second stream at a different resolution is, but we know there is one…at least one…
We also know that Wyze streams video in multiple other protocols. For example, we know streams to Alexa and Google displays use WebRTC, while the Webview uses some Amazon Protocol that Wyze previously said routes through the internet instead of staying local (or at least it used to when it first launched since they said they were being charged per stream). We assume the live stream at least uses something different since it stays local, and seems to have a different quality than Google/Alexa. Sometimes when I stream to my Google or Alexa, it looks fine unless I try to zoom in at all, at least I noticed this recently on my V3Pros, then it is obvious that it is showing me the view in something other than 2K/HD, because it is immediately unviewable if I try to zoom in. So definitely not streaming to those in 2K despite me having it set to 2K in the app, which does seem to stream in 2K.
In Docker Wyze Bridge they indicate multiple streams:
Though I think they are converting it, I am not 100% confident, but it is interesting that they say they have 3 streams going for each camera.
Regardless, it definitely does do multiple streams at a time, since a camera can upload a cloud video while streaming to a phone (and still record to the SD card). In fact some cameras can do all of the following at the same time: Upload a full-motion event to the cloud, upload a 12-second sound event clip, stream liveview or SD card playback to the phone (sometimes stream liveview to more than one phone), stream to a Google/Alexa Device, stream to webview, and record to the SD card. Someone tested the streaming limits on some cams. I can’t remember the outcome, but I think someone got up to like 5-6 device streams at once one time before it started ending streams from overloading the camera. 
Maybe they’ve changed things since then as the OG’s are limited to 2 device streams at a time now.
I think I am leaning toward a hypothesis of: the live stream will try to stream in whatever quality you set it to, while the SD card playback might vary based on the network connection available to try to provide a stable stream. So your video might freeze and fail on the live stream when set to HD, but work better for SD card playback. We would need an employee to chime in with more information to be sure of anything though.