Hardware sprites (and presumably interrupts) made the Amiga mouse pointer move fluidly and responsively even when the CPU was busy. No complex graphics pipelines or laggy LCD screens to add further latency back then either.
Indeed - it's no deep magic, "all" you have to do is update the sprite's position from within the very same interrupt which reads the mouse counters. Oh, and make sure that nothing involved in that process can be paged out, ever. (The Amiga made sure of that by not supporting virtual memory!)
We even see it now, sometimes called "hardware cursor" in various games settings, althought pipeline is much longer.
Just that old small hardware had little to no memory protection and very tight integration so stuff like that could be done directly instead of going thru many layers of abstraction
You can do it with very little. Prime example: https://www.folklore.org/StoryView.py?project=Macintosh&stor...; drawing a mouse pointer on an almost stock Apple II, flicker-free because drawing is synced to the vertical blank interval, even though the hardware cannot see when that happens (that part I don’t quite understand; I can see them detecting ‘end of screen’ on an almost blank screen and programming the timer to generate a periodic interrupt at about the screen redraw frequency, but wouldn’t the VBL and the 6522 interrupts drift away from each other over time?)