Hostile mobs rapidly despawn and respawn repetitively when you're about 125 blocks from the ground. This is easiest to see in the End.
Video: 0:52~0:58 https://www.youtube.com/watch?v=UgiTzg2jr_A
Squid spawning causes server to lag.
Steps to reproduce:
Render Distance > 16 chunks
1. Fly high above an ocean around height of 200.
2. Wait at least a minute.
3. Fall down and see squid spawning and despawning rapidly everywhere
At height 200 above a level 46 ocean, the server becomes laggy. The longer you stay above the ocean, the more the squid lag seems to "accumulate". Eventually the lag will dissipate and the squid spawning will go back to normal. An aqua affinity helmet will help you see all the squid spawning/despawning
These error messages start to pop up if you stay at the 200 height for a while(10 minutes or greater). While an indicator of general lag, the server is fine any other time except when at 200 height above ocean.
31.12 06:09:28 [Server] INFO [06:09:28] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2414ms behind, skipping 48 tick(s)
31.12 06:09:09 [Server] INFO [06:09:09] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2180ms behind, skipping 43 tick(s)
31.12 06:09:03 [Server] INFO [06:09:03] [Server thread/INFO]: Saved the world
31.12 06:09:03 [Server] INFO [06:09:03] [Server thread/INFO]: Saving...
31.12 06:09:03 [Server] INFO [06:09:03] [Server thread/INFO]: Saving is already turned on.
31.12 06:09:03 [Multicraft] Auto-saving world...
31.12 06:08:51 [Server] INFO [06:08:51] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2156ms behind, skipping 43 tick(s)
31.12 06:08:36 [Server] INFO [06:08:36] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2383ms behind, skipping 47 tick(s)
31.12 06:08:21 [Server] INFO [06:08:21] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2091ms behind, skipping 41 tick(s)
31.12 06:08:06 [Server] INFO [06:08:06] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2775ms behind, skipping 55 tick(s)
31.12 06:07:49 [Server] INFO [06:07:49] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2298ms behind, skipping 45 tick(s)
31.12 06:07:46 [Server] INFO [06:07:46] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 14709ms behind, skipping 294 tick(s)
31.12 06:07:15 [Server] INFO [06:07:15] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 4657ms behind, skipping 93 tick(s)
31.12 06:07:10 [Server] INFO [06:07:10] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 19226ms behind, skipping 384 tick(s)
31.12 06:06:37 [Server] INFO [06:06:37] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 7385ms behind, skipping 147 tick(s)
31.12 06:06:22 [Server] INFO [06:06:22] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 10029ms behind, skipping 200 tick(s)
31.12 06:05:55 [Server] INFO [06:05:55] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 5317ms behind, skipping 106 tick(s)
31.12 06:05:33 [Server] INFO [06:05:33] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2275ms behind, skipping 45 tick(s)
31.12 06:05:11 [Server] INFO [06:05:11] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2067ms behind, skipping 41 tick(s)
31.12 06:04:49 [Server] INFO [06:04:49] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2003ms behind, skipping 40 tick(s)
31.12 06:04:17 [Server] INFO [06:04:17] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2059ms behind, skipping 41 tick(s)
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Confirmed.

The endermen despawns and respawns all the time from that distance, which causes this issue.

This does not only occur in the End. This seems to happen to all hostile mobs. Haven't seen friendly mobs having this behavior though. Please update ticket.
Added a GIF.

Sorry for nagging but I would like the ticket to be like this (it's more clear):
Summary:
Hostile mobs repetitively despawn and respawn rapidly at high Y coordinates
Description:
Hostile mobs rapidly despawn and respawn repetitively when you're about 125 blocks from the ground. This is easiest to see in the End.
See attachments.

Affects 1.13-pre1

I would change description to "Hostile mobs are spawning over 128 blocs away from player which is enough to instantly despawn them"

The thing is, hostile mobs aren't the only things that naturally despawn these days, and when it comes to 1.13 oceans in particular, it causes absolutely massive lag. I can't speak for how laggy it is as a server host (my tick rate by myself is completely unaffected in 1.12 when it's just squids constantly spawning/despawning), but oceans never lagged me to such hardcore levels until the new water mobs. Now my ticks get slowed down by about 80% in 1.13 oceans when things are constantly spawning and despawning due to this bug.
Also figures I'd find this report immediately after I create one about this exact problem XD (MC-132406)

Can anyone confirm for 1.13?
Confirmed for 18w30b

https://www.youtube.com/watch?v=zuturtGss7A Here you can see how quickly they spawn and despawn again
Confirmed for 18w31a

Confirmed for 18w32a


Experiencing the same problem in 1.13.1 with massive lag and issues due to Cod AI.

This is a big problem for cod in the oceans.

Future Version - 1.14 should be removed from fix versions, as it's fixed in 1.13.2-pre1.