Sprites appearing on top of other blocks

I made a 2x2x1 hole filled with water. I put a blue coral in the top left, a yellow coral in the bottom left and a seagrass in the bottom right. I then proceed to place any other color of coral in the remaining space, and the blue coral's sprite appears slapped right on top of the new coral. If I delete the new coral and place a seagrass, the seagrass sprite appears on top instead. I mix-matched all the other corals and found that the blue coral's sprite still stayed there if I didn't place another seagrass. If I remove the seagrass completely and fill the box with corals, all is normal. I don't think this is supposed to happen...