I had already tried a similar approach except for defining

module ErrorEvent =
  Event.SyntheticEvent({
    type payload = {error: string};
  });

instead of

module ErrorEvent = {
  type payload = {error: string};

  include Event.SyntheticEvent({
    type _payload = payload;
  });
};

and kept getting errors trying to access fields, both with local opens and type annotations. However, as I kept getting errors even with fields such as nativeEvent, I didn't suspect inline definition of payload.
Anyway, I've tried your version and it works. Further, it can be broken with inline definition so there might be a bug with the compiler for this edge case, either it should work or it should lead to an error referring to the inline definition.

I just read it, did you try the following:

module ErrorEvent = {
  type payload = {error: string};

  include Event.SyntheticEvent({
    type payload;
  }) with type payload := payload;
};

This is the syntax to redefine types in an include.

Possibly we can even remove the need for it to be a functor (why is it a functor?)

This would possibly enable the following:

module ErrorEvent = {
  type payload = {error: string};

  include Event.SyntheticEvent with type payload := payload;
};

Much simpler 😄

That syntax doesn't work for me on 7.3.2 or 8.0.0. Something like

module SyntheticEvent = {
	type payload;

  type t = {
    bubbles: Js.Nullable.t(bool),
    cancelable: Js.Nullable.t(bool),
    currentTarget: float,
    defaultPrevented: Js.Nullable.t(bool),
    dispatchConfig: registrationName,
    eventPhase: Js.Nullable.t(float),
    isTrusted: Js.Nullable.t(bool),
    target: Js.Nullable.t(float),
    timeStamp: float,
    [@bs.as "type"]
    _type: Js.Nullable.t(string),
  };

  include EventMethods({
    type event = t;
  });
};

module ErrorEvent = {
	type payload = {error: string};

	include (SyntheticEvent:  (module type of SyntheticEvent) with type payload := payload);
};

works only when t does not depend on payload as above. Once the nativeEvent key is added, it appears we have to override t as well.

Sorry for dropping off the conversation, I've been swamped with a work project in the past weeks, but now I'm free(r) now that I've submitted my part yesterday.