I'm not 100% sure if this is everyone's experience, but when running Firefox with Wayland (not as an xwayland window), Picture-in-Picture windows don't stay above by default.

If you are similarly afflicted, the workaround is literally ten clicks away (assuming you have a scroll wheel) using Window Rules. You could create and fill the rule manually, but now that I've mentioned the ten clicks thing I'm committed to only using clicks in this quick how-to.

Step 1: Right click an open Picture-in-Picture window. In the context menu, select "More Actions" -> "Configure Special Window Settings...". This will populate most of the window settings for you.

Step 2: Click "Add Property..." and select "Window title". The newly added row's text field should read "Picture-in-Picture". Change the dropdown option from "Unimportant" to "Exact Match". (All PiP windows in Firefox use this title and by making it Exact Match the rule shouldn't affect any other Firefox windows.)

Step 3: Click "Add Property..." again and this time select "Keep above other windows". The dropdown in the newly added row should be set to "Apply Initially". Select the "Yes" radio button if it isn't already.

Step 4: Click "OK". That's it. No more manually setting Keep Above every time you open a PiP.