I still don't understand why [..] I have to toggle between pressing up or pressing down from the new command-prompt to access the previous commands.
It is because the shell history has its own completely invisible cursor, and the cursor is not reset after a command. So when you press <up> three times, then press <enter>, your history cursor is still at -3 (actually, -4). If you then want to move to command -2, you need to press <down> instead of <up>.
The real fun comes when you edit commands in your history (so press <up>, then edit the command line). I'm still not quite sure how Microsoft handles that.
It is because the shell history has its own completely invisible cursor, and the cursor is not reset after a command. So when you press <up> three times, then press <enter>, your history cursor is still at -3 (actually, -4). If you then want to move to command -2, you need to press <down> instead of <up>.
The real fun comes when you edit commands in your history (so press <up>, then edit the command line). I'm still not quite sure how Microsoft handles that.