Essentially, entities that are further away from the player appear to have broken, choppy movement and seem to teleport around. Keep in mind that this is only an issue in the latest beta.
How to reproduce: There are many ways to do this. My way of doing it is shooting an arrow and viewing it fly far away. You might notice its movement getting worse.
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Confirmed based on attached video.

Affects 1.16.200.55 Beta

I believe this is caused by the `"minecraft:conditional_bandwidth_optimization"` component, which "makes sure level event packets only broadcast locally", which drops ticks for better server side performance.
https://bedrock.dev/docs/beta/Entities#minecraft%3Aconditional_bandwidth_optimization
I do notice the choppiness though, so I will upvote.

ambient's comment mentioning server-side performance reminded me that I've experienced choppy movement off-screen. So I think this is not just a rendering issue, but actually an entity ticking issue that negatively impacts the game's functionality.
Here is what I mean:
During the 1.16 betas I built a contraption to test the changes to vertical despawn distance. It consists of a zombie spawner high in the air over a platform that flushes zombies down a drop shaft. Every 10 blocks of the drop shaft there is trip wire attached to command blocks. Those command blocks, when powered, place redstone blocks to activate a system of redstone lamps. Other command blocks reset the system soon after each display. This contraption allows you to stand by the zombie spawner to get frequent mob spawns and observe the lamp display for a readout of how far the zombies fall before despawning. The output is fairly reliable on my Windows 10 PC, but on my iPhone 8 it is not reliable at all. It seems that when the zombies are falling outside the player's FOV, their positions are not updated often enough to consistently register collisions with tripwire that is placed every 10 blocks.
Here is the test world:
[media]
UPDATE: Another ticket, MCPE-94945, earlier raised the suspicion that unreliable mob updates farther from the player could lead to random despawns due to mobs not being saved to chunks. I have resolved that ticket as a duplicate of MCPE-21416 where we track the issue of random despawns generally, but the hypothesis seems at least on the surface to be related to the issue tracked here. If, indeed, optimization coding causes mob ticks to be skipped during times of high server/CPU activity or storage access such as loading and saving chunks, that might begin to explain the many anecdotes of mobs disappearing after long-distance travel and use of nether portals.

affects 1.16.100. It seems that this also locally affects item sprites before they hit the ground. They appear very jittery while in motion in 1.16.100, but this does not happen in 1.16.40.

This issue could also be related to the mobs desyncing tracked at MCPE-101202 and MCPE-71243. Both this and the villagers flying out of beds started with 1.16.100.57 beta.

This rendering issue happens litteraly every second, and not just far away; This can even be noticed to nearby, slower mobs if looked closely.
There is a similar issue with animated icons for utility blocks, notably the blast furnace: The white filling up the processing icon (arrow in blast furnace case) very briefly lags every second. Is there already a report about this one?
Maybe something causes both issues of similar nature.

I added a link to this related issue.

Affects 1.17

affects 1.17.10

Not sure what was fixed in 1.17.20.23, but I'm still noticing mobs having choppy movement from far away as of 1.17.30.20.
The ones that are fixed in 1.17.20.23 are just projectiles, so this isn't fully fixed yet.

Still an issue as of 1.17.30 and the latest beta 1.17.40.20. It's probably better, but projectiles are still very choppy the further away they are from the player.

Projectiles still seem choppy even though it's been stated to have been smoothed. Mobs are affected much more I'd say

It's a very annoying bug, minecarts are the strangest affected entities. Does someone know if it happens to all players? because I really dont remember if it happened on previous versions for me, but now it happens
Reply from @unknown: that is a different issue, tracked at MCPE-141920.

When looking through the entity documentation, specifically at projectiles, I found the cause of the issue. The parts under “conditional_bandwidth_optimizations” known as “max_dropped_ticks” and “max_optimized_distance” are what is causing entity movement to become choppy from a distance. Max dropped ticks is the amount of ticks before motion packets can be sent. Essentially, if the max dropped ticks was set to 10 and the max optimized distance was set to 20, entities further than 20 blocks away would only have their movements registered every 10 ticks. By changing the max dropped ticks value to 0, the entity would always have motion packets sent properly, no matter the distance. As a result, the movement would stay consistently smooth no matter the distance. I tested this with a behavior pack I made myself, and the results are entity movement staying consistently smooth. Hope this helps.

It seems to be a good solution, could you explain how to change these things?

Download the behavior pack template, look where it says entities, open up a projectile entity file, and then scroll down. Then, you will see the conditional bandwidth optimization values. You can tinker with them and copy them into other entity files.

Affects version 1.19.31

affects 1.21.0

It’s been a few years now and I think this is an easier fix as LightKnight has demonstrated. Having observed these years without any fix for this issue I would like to bump it as this issue is really annoying. Is there some particular constraint keeping the devs from fixing this issue?

Seems to still affect 1.21.50.28 Preview.

…and 1.21.70 versions.