When a zombie dies as it transitions into a Drowned, it drops death loot. The Drowned mob doesn't die in transition.
Conditions
Old world size (Seed: 1273159352)
64x Resources (Chroma Hills HD 1.0.18)
Resources loaded on world load
Online without Multiplayer enabled
Easy difficulty
Survival world
Simulation Distance: 4
Render Distance: 14
Particle Render Distance: 100
Textel AA enabled
[All graphical settings enabled]
Screen animations disabled
Linked issues
Comments


I believe they are supposed to drop their items. The gamepedia article says that if they picked it up 100% chance of them dropping it. If they spawn with armour/tools 8.5% chance of them dropping it during conversion.

They drop rotten flesh when their zombie form dies. I don't remember seeing this happen anywhere but this instance; Java or Bedrock

I am kind of confused what is the bug that is happening?

If you notice in the video, the zombie shouldn't have dropped rotten flesh.

So the bug is that when they transition they drop their mob loot. However, they are still alive and are just drowned. Correct?

Yes

The Nintendo Switch updated from 8.0.1 to 8.1.0

I can't replicate it. Can you consistently? If so is it only on that one world?

It's not consistent. The mob has to die the same time it transitions into a Drowned for it to work. Maybe lag could be another factor since my game tends to have a lot of lag spikes.
Thank you for your report!
We're actually already tracking this issue at MCPE-33140, so we will resolve and link this ticket as a duplicate.
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I don't know if the information provided is necessary but I decided to add it anyway.