Having some issues with the FGD-212 v3.5 integration.
After connecting it as a momentary switch, in 3-wire connection setup the wall switch worked fine before connecting to hubitat hub c-5. I was able to turn light on / off and dim with wall switch.
After pairing with hubitat hub, the wall switch seems to be inverted. When pressing the momentary switch it turns the light off. When releasing the switch it turns it back on.
I have changed to "momentary switch" in the setup in hubitat config.
What version of Hubitat are you running? In 2.1.7 I get exactly the same issue as you describe and the reason is that even though you are setting it as a momentary it will still be bi-stable. Further more the state isnβt updated when you toggle it.
Downgrading to 2.1.6 solved all above problems for me!