I debated about reporting this one because it makes the game so easy that I hardly have to try... And REALLY comes in handy for the boss fights.
Basically if you hit ESC at any point inside or outside combat and change difficulty to another level and then immediately change it back, all party members have full health again but enemies do not also reset. Even if everyone in the party isn't able to act... With this bug and a party of fighters, one could in theory play the whole game without a single long rest... It is the closest bug that allows something akin to GOD MODE that I have found.
Given WHY people change the difficulty level, I can't imagine others aren't going to stumble on this one. Whether you fix it or leave it in for people like me who (would) struggle even on easy difficulty is up to Larian.