The browser will always return a 404 for style.css when you run yarn start because it uses webpack to inject styles directly into the page. The file in your dist folder is probably one left over from running yarn build. The specific error you’re seeing seems new. This workaround may work for you: Enable CSS build when watching · Issue #1826 · roots/sage · GitHub
Some other discussions:
https://discourse.roots.io/t/sage-9-main-css-404-on-devurl/9799/33
https://discourse.roots.io/t/consequences-of-absent-main-css-with-yarn-start-sage-9/10755/3