A similar issue came up in astral-sh/ruff#20360. We now unconditionally promote any literals within the elements of a list/set literal, partly for performance reasons with large list literals. However, this means that we fail to typecheck against literal annotations, e.g.,

# error: Object of type `list[int]` is not assignable to `list[Literal[1, 2, 3]]`
x: list[Literal[1, 2, 3]] = [1, 2, 3]

# error: Object of type `list[str]` is not assignable to `list[LiteralString]`
x: list[LiteralString] = ["a", "b", "c"]

Which is the same issue we currently run into with generic classes:

# error: Object of type `tuple[X[int]]` is not assignable to `tuple[X[Literal[1]]]`
x: tuple[X[Literal[1]]] = (X(1), )

My reading of this issue is that we promote should eagerly promote literals, unless there is an explicit type annotation that would require otherwise? That seems to align with pyright's behavior as well.

@carljm pointed out that this could get tricky with nested types, or even unions:

x: list[int | Literal["a"]] = [1, 2, 3, "a", 4, 5, 6]
reveal_type(x)

Originally posted by @ibraheemdev in #336