You have definitely created a strange fractal-like behavior, but not in the equation itself -- rather in Desmos's plotting software :)
The problem with this equation is that it is true not for a one-dimensional curve of points, but rather for the two-dimensional space of points $(x,y)$ where $xy \ge 1$. Algebraically:
$$
\frac{\max(1, xy)}{y} = x
\iff \max(1, xy) = xy \iff xy \ge 1.
$$
The true plot of this is as follows:

Graphing software -- including Desmos -- is usually optimized for the case of plotting a curve, rather than a 2-dimensional space of points. It is likely that is the reason for the weird behavior.
FWIW, Desmos does warn us that something might be up with this plot, as shown by the following warning in your screenshot:
