They're confined to immovable physics objects, confining them to the layout and/or to the screen is not always viable, therefore it should not be considered a solution.
Also I tweaked every setting, including friction and dampings from both parties (the squares and the immovable block). As stated previously, the problem lies in the Gravity setting.
And yes, you're right, every time a physics object is moving, it is finding a resting place, can't see how it could be any different.
And also yes, it is undesirable, therefore, as I mentioned, there should be some sort of note on the docs or maybe, if possible, something should be done about it in the engine.
EDIT: As a last reminder, everything happened with out-of-the-box settings, except for gravity, that's why I'm confident in my findings and hoping something can be done about it.