What does “stream stopped by the system” mean?

It means the macOS capture session ended and BetterDisplay received a stop notification. The message tells you that capture stopped. It does not by itself identify the cause or show that another app stopped it.

Check whether the stream was stopped through the system’s sharing menu, whether its source display disconnected, or whether the Mac was entering sleep. If it stops unexpectedly while the setup is otherwise unchanged, retain the exact stop message and the surrounding log entries.

To collect BetterDisplay’s verbose output, quit the running app, then launch it from Terminal with:

/Applications/BetterDisplay.app/Contents/MacOS/BetterDisplay -v

Reproduce the interruption and look for stopped with reason:. The log includes the reported error and whether BetterDisplay classified the stop as unintentional. That classification is useful evidence, not a complete diagnosis. Review logs for private details before sharing them.

You can restart the affected Picture in Picture or stream directly through its App Menu entry or a Shortcuts action. Reconnecting an entire virtual display is not required merely to start its capture again. If it keeps stopping, collect the log so the recurring interruption can be investigated.