The bug
In the 1.21.120.20 changelog, the following “feature” was added:
Mobs will now become slightly transparent when the camera gets too close or passes through them
Although the line says “mobs,” this applies to all entities: minecarts, armor stands, end crystals, etc. However, it does not apply to other players.
How to reproduce
Find a friend
Stand in them
Expected result
Your friend should become a ghost
Observed result
They look normal
Is working as intended because the changelog says only mobs apply this at the moment.