Entities and block entities do not fade correctly when the chunk fade setting is active

The bug

Entities and block entities do not fade correctly when the chunk fade setting is set to a noticeable amount of seconds, making them pop in at the distance.

How to reproduce

1. Spawn some mobs at the distance.

2. Set your chunk fade setting to 2 seconds.

3. Reload all chunks (default F3+A).

Expected result

Entities and block entities would fade in like surrounding terrain.

Observed result

Entities and block entities pop in at the distance.