After the fix of MC-35658, the top surface of water source blocks is visible again, but the surface of flowing water blocks is still invisible (obviously someone forgot to apply the fix of MC-35658 to flowing water too).
To reproduce it, just place yourself inside a waterfall or something similar. Flowing water WAS VISIBLE IN 1.6.4 !!! I see no reason why it shouldn't in 1.7.x, it just looks weird.
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...still, graphical glitches should have screenshots from the start.
I, for instance, have no access to Minecraft at the moment.
The argument that things were visible in 1.6 is no argument, 500k lines of code were changed during the 1.7 snapshots, including a update/rewrite of the transparency of certain blocks. And please, don't use capslock.

@Galaxy_2Alex:
First, I'm back on my computer now and just uploaded screenshots, nothing to complain. Second: You can see that this is an obvious bug that wasn't present in 1.6.4, so why isn't this a valid argument? Third: I USE CAPSLOC WHEREVER I THINK IT'S NECESSARY 🙂

Yes, it is a bug, I have no doubt in that. Haven't really been logical there, sorry.
Attached 3 more screenshots showing the view from inside a waterfall in 1.6.4 vs. 1.7.2 vs. 13w47c. 1.6.4 shows you where you are in relation to the water surface on all sides. The other two just have you sort of floating in space.
This has a gameplay impact as well as an aesthetic one. If you're trying to maneuver down a ravine using water flows, you can't easily see where the water ends and a potentially fatal drop begins.
This (what Kahr said) is one of the visibility issues caused by improper use of backface culling I was trying to point out with MC-34751.
If the water is in a square, only 1-2 (3 with the top) sides will be facing you, so you only see those, and it could continue on in that direction for an unseen amount, or just be 1-block thick. There is no way to tell without walking around the object to tell. Additionally, with water when you're inside NO FACE is facing you, so all faces are culled (except the top now), and thus it's still a waterworld in some conditions (like being in a water pillar).
Mog didn't seem to get that ("one can clearly see the point at which the stained glass meets the ground, and the fact that the stained glass texture and the block texture on which it rests will be the same size is a perfectly acceptable visual cue." wat?)......
If it's still a "I don't need to know where it is as long as I can see through it a little better" issue, inter-block (if it's touching a block, the texture does not show) culling should be applied to full transparent blocks as well, so flowing water never shows on glass/ice (or any solid-block, either). Issues like these can be solved other ways than backface culling.
Yes, there are still definite issues with water's visibility when inside a water block. That said, my objection to backface culling being turned on for stained glass is irrelevant to this bug.
I'm trying to say that the backface culling issue is not just for water, it's a general visibility issue. I understand that you won't just turn backface culling off everywhere by default, that wasn't my intention.
I just feel a little insulted that you say my issue was "so well written" and then you close it with a comment that makes it seem like you didn't read or understand the issue. I have no idea what you were trying to say to dismiss it, but it had nothing to deal with what my problems with it are.
I know I probably didn't explain the visibility issue very well, but I attached screenshots with and without backface culling that should clearly demonstrate the issue. The reason I commented here is because it's the exact same issue here: you need to walk around the water in order to tell where it really is (and then you need to remember). You can't clearly see where the water is at from 1 direction like you could for every Minecraft version before this change.
Backface culling is just ugly and weird to me. I was trying to point out that uses like this should not be implemented, because they cause problems like this. There was no problem with water before. Water is not supposed to be very visible through (and again, the texture can be changed if that is what the user desires), and I've never heard anyone complain that is wasn't. That's why I'm surprised that you didn't just revert water to how it was before.....

@insomniac_lemon:
All you write is probably just too much to read 😛
Btw., the flowing water visibility issue is a confirmed bug and Mog will hopefully fix it soon. And just like you, I'm not very happy about the current use of backface culling in general (for example, if you stand on a stained glass pillar and look down, you can't tell if the pillar is 1, 5 or 50 blocks high). What I still don't undersand: There seems to be a way to activate/deactivate backface culling for specific blocks or textures inernally, so why don't we get an option to change it using resource packs? A simple "backfaceCulling=true|false" inside a mcmeta-file would be enough to make everyone happy 🙂 @Mog: To end all the discussions about water/glass/etc: Would it be possible to make the backface culling stuff optional and editable by resource packs in any way?

This is fixed in 13w48a. Thx Mog 🙂
I'll provide some screenshots later (the problem is quite obvious without too)