Some gravity blocks are destroyed & dropped as an item when attempting to occupy the same space as another gravity block

I know what's happening here, but not sure if it's supposed to happen. Breaking sand in the way you did causes some of the falling sand entities to overlap. When one block hits the bottom of the tower, it causes the sand entities to be inside a block, forcing them to break and drop as items.

I can confirm this in 20w48a. As stated above, this is happening because the sand is stacking inside one another whilst it's falling. It is able to do this as when any block is falling, it is considered an entity. When the stacked sand eventually reaches the ground, it turns into its block state and as you may already know, multiple blocks cannot occupy one space, therefore the some pieces of sand drop as items.

Can confirm in 20w51a.

Can confirm in 21w03a.

Can confirm in 1.16.5 and 21w07a. When reproducing this issue, ensure that the doEntityDrops gamerule is set to true.

Can confirm in 21w16a.

Requesting ownership of this issue as currently the title is missleading to what the actual issue is, and the description is very bare-bones. The original issue poster is also inactive.