(Also posted at Avsim).
Quick answer:
Post update (1.13.16.0) MSFS now used a DXGI swap chain which allows for (actually designed for) a frame rate unthrottled by vsync but this has the side effect of allowing screen tearing to be observed. This was a design change by Asobo.
Solution to the screen tearing:
If you want to run MSFS in fullscreen mode then switch on vsync in either the in-game setting or nvidia control panel.
If you don’t want to use vsync then run in windowed mode (you can make the window almost as big as the desktop but just not the exact size of the desktop).
Longer answer:
The DXGI swap chain coordinates the handling of a frame drawn by the app on its journey to the screen. The app, Desktop Windows Manager (DWM) and graphics card all are involved in this.
Prior to this update MSFS used a basic form of the swap chain called “Copy Blt[sic]” which was always subject to vsync restrictions placed on it by DWM.
The downside of this method is need to copy the entire screen at some point in the chain - this takes time. The upside was no screen tearing could be seeen.
This latest version of MSFS uses a mode called Flip (discard) which does not need that screen copy. However, if you run MSFS in a window using this mode then DWM still applies vsync but retains the speed increase of not needing a copy.
BUT you run MSFS in fullscreen mode (note this is still NOT full screen exclusive) then DWM removes that restriction and leaves control of vsync up to the app itself. This is called Flip (discard) immediate. DWM takes a back seat. DirectX detects when the app is completely covering the screen and uses this to switch into that mode. Note any other windows open on top of MSFS will results in thst mode not being applied.
This mode was added to DirectX to remove the latency inherent in any swap chain that involved vsync being turned on but the cost is that screen tearing can be observed. It is generally accepted that use of this flip mode results in an app that runs as well as the old Full Screen Exclusive mode but none of the disadvantages.