craco.config.js

module.exports = {
    module: {
        rules: [
            {
                test: /\.m?js$/,
                exclude: /node_modules/,
                use: {
                    loader: 'babel-loader',
                    options: {
                        plugins: [
                            [ "@babel/plugin-transform-react-jsx", {
                                "pragma": "h",
                                "pragmaFrag": "Fragment",
                            } ]
                        ]
                    }
                }
            }
        ]
    },
    webpack: {
        configure: {
            "resolve": { 
                "alias": { 
                    "react": "preact/compat",
                    "react-dom/test-utils": "preact/test-utils",
                    "react-dom": "preact/compat",     // Must be below test-utils
                    "react/jsx-runtime": "preact/jsx-runtime"
                },
            }
        }
    }
}