This issue started occurring for me at 1.2.6 after I updated my Pixel XL to Android 8.1.
In short, when touch controls are used (I use left thumb on d-pad and right thumb to turn) the camera flicks rapidly back and forth. This issue is extremely irritating to the point of making the game unplayable.
The attached video may better explain the issue.
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I've attached a second video that further demonstrates the bug, this time with the mining circle instead of crosshair. The touch points should remain inside that mining circle at roughly the center, at all times. Instead the mining circle randomly jumps around when the bug occurs.
I've tested a range of versions dating back to 1.1.4 and this bug occurs on all of them. I distinctly remember this was not an issue before I updated my device to Android 8.1.
Confirmed that this is a bug in the Pixel's Android 8.1 firmware update, the bug causes multi-touch problems in a wide range of other games apart from MCPE. This ticket could be closed.
Confimed on Galaxy Tab A 10.1 2016, in a LAN/Xbox Live world