Don't look at this from the perspective of why this was so lousy. Look at it from the perspective why this is so good.
I thought Earth-observing satellites need to be extremely stable to provide a clear picture.
This is extremely stable. Look at how clear each frame is.
but the video seems to suggest that the satellite is making lots of small corrections of its orientation with respect to Earth. Is this possibly correct?
This short video was taken from a satellite in low Earth orbit at 450 km altitude. That means that the satellite is moving at a speed of over 7.6 km/s. The satellite is small, essentially the size of a mini fridge.
The satellite and imaging equipment needs to be rotating / moving very precisely to keep the imagery focused on one spot and to avoid motion blur. To repeat an image, the satellite has to reposition itself / its imager for every video frame. This control not perfect; nothing ever is.
The video in question is one of PlanetLab's videos products. From PlanetLab's developer resource center on their video products,
The SkySat Video products include a video mpeg-4 file, with all captured frames used to produce the video as L1A panchromatic scenes.
So what are "L1A panchromatic scenes"? From PlanetLab's developer resource center on SkySat,
Basic L1A Panchromatic assets are non-orthorectified, uncalibrated, panchromatic-only imagery products with native sensor resolution (0.72-0.81m), that have been made available roughly two hours before all other SkySat asset types are available in the catalog. These products are designed for time-sensitive, low-latency monitoring applications, and can be geometrically corrected with associated rational polynomial coefficients (RPCs) assets (derived from satellite telemetry).
Level 1A (L1A) data from an imaging satellite are very close to raw data. In particular, the SkySat L1A data are "non-orthorectified", which means the imagery has not been processed (e.g., rubber-sheeting) so as to make the imagery line up with ground correction points. The imagery is what the satellite saw. Yes, it's a bit wobbly. That is to be expected with L1A data.