My girlfriend and I had the same issues. The lag was horrible. Our area was unplayable and she would still see my character standing somewhere I left more than a minute before. We were planning on moving to an area with the new generation and when we eventually started flying enough blocks away from the old builds (about 500 blocks) it al started working as normal. We can play fine now, but you shouldn't have to leave your area to be able to play. With the update already delayed, which is fine if that's what is needed for it to come out polished, it is unacceptable it's released in this state.
This happens all the time on a local multiplayer world. Even when placing blocks, they sometimes disappear and reappear a second later, causing a lot of falling when towering up. Mining through Netherrack in the Nether when searching for Ancient Debris and mining ores with fortune is the worst of all. Because of all the things happening at once (unbreaking, mending, picking up blocks/ores) blocks sometimes need to be mined like 3-5 times. I hope the developers know this issue isn't resolved by a long shot.
Does anyone know what the chance is that the affected world is permanently bugged? Can Mojang fix existing worlds or do you have to start a new world anyway? It would be so sad if the world is gone so to say, but i would be wary to start a new world as well, because there could be a chance that world would eventually get bugged as well.
Can you keep us posted if something changes for you? Got the same problem and the same errorcode and I really hope it gets fixed soon. We have an amazing world and would like to keep it.
Because of the lag, my elytra randomly kept turning off in the overworld and the Nether, causing me to fall in the lava and dying even after I got out it with seemingly decent health. I lost part of my gear for sure, but I can't go back safely because of the lag to retrieve my stuff. Thankfully, because it's outside the simulation distance it shouldn't despawn, but I'll wait until I'm sure this is fixed before I lose any more gear. Flying is impossible with the lag as well it seems