Using csl: https://www.zotero.org/styles/apa (etc) doesn't include hanging indents (citeproc: true). Also when citeproc: false bibliographystyle: apa has similar issue. The latter is an upstream Typst issue.
For now the fix is
format:
preprint-typst:
include-before-body:
- text: "#show <refs>: set par(hanging-indent: 1.4em)"