I don't have an answer for you, but I want to get specific: is the system hibernating (power button light stays out), or sleeping (light slowly flashing)?

Could you please provide your Windows version, and your "Screen and sleep" settings under Settings>System>Power?

When this happens there are no lights flashing or on. If I press any key on the keyboard, keyboard illumination goes on for a few seconds and nothing else happens (normally it wakes up the laptop from sleep). When I press the power button, sequence and duration of waking up look to me like in normal power on (so much longer than coming out of sleep), with the only difference that all the windows and applications are in the same state as when the issue interrupted me (as when sleeping). Since this is something between sleep and power cycle, I presume it is hibernation.

Details on the machine:

• Processor Intel(R) Core(TM) i7-10510U CPU @ 1.80GHz 2.30 GHz
• Installed RAM 16,0 GB (15,8 GB usable)
• Device ID 2E5F4FF7-AAEE-49E8-915E-9120C52CFA89
• Product ID 00330-52417-89921-AAOEM
• System type 64-bit operating system, x64-based processor
• Pen and touch No pen or touch input is available for this display

Details on Windows:

• Edition Windows 10 Pro
• Version 22H2
• Installed on ‎27.‎9.‎2020.
• OS build 19045.2364
• Experience Windows Feature Experience Pack 120.2212.4190.0

Power settings are:

One more possibly important thing to note is that normally I have the laptop plugged in only to USB C docking station, the power supply is connected to the dock so I have only one cable to manipulate when (dis)connecting the dock. Laptop notices this and warns me on boot that supply power is lower than expected and Windows notify me that charging is slow. I routinely ignore these warnings. Probably has nothing to do with this issue because I've been using the laptop in this manner from the beginning and this issue started happening more recently.

First, let me preface my reply on the fact that I am a tech diot, LOL. That said, I am not sure that the docking station isn't an issue -- perhaps the laptop is not getting that the docking station is simply a middle-man between the laptop and the power source. Also, when you fire up this way, you are getting a notice -- supply power is lower than expected...AND Windows notifies you as well! 

That said, why are you sleep settings so low? Is the machine going into a sleep mode, but with enhanced sleep settings? Sorry, I cant specifically provide a solution. All the best!

I'm confident that the docking is not an issue because the problem manifests also when the laptop is working on battery. Sorry for not mentioning it sooner. 

Settings are low because I like to conserve energy ;). I'm not familiar with "enhanced sleep settings" but it is irrelevant if we call it that or "hibernation". I don't want my laptop to go there while I'm working...

is there 'never sleep again' mode? A 'stays woke' tickbox? ALAS.