Block textures appear blurry. This does not affect the outer edges of the block or the space between two blocks, which still appear aliased. This occurs with and without mipmaps & anisotropic filtering. Attached are two screenshots, one with mipmaps & anisotropic filtering enabled at the max setting, and another with both of them disabled.
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After consideration, the issue is being closed as Working as Intended.
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Zoomed in screenshot for better visibility, notice how the edges of the grass block & grass overlay are aliased, while the textures themselves are not.