This bug is NOT fixed as of version 1.8.8
Reproduced it quickly (thx to Someone 3x7 for that nice guide): https://www.youtube.com/watch?v=JQYbVJn3byc
the upload is in 360p, youtube is just being slower than me right now.
In case youtube decides to be mean, I will keep the VoD on my twitch channel http://twitch.tv/foxcatumbreon
this is NOT a duplicate of 2208, i repeat NOT a duplicate, so please remove that connection.
I also included a different version of this bug with fences in the VoD.
I hope this gets fixed quickly because it's easy to pay double for single blocks/fences in survival (which I also showed in the VoD). You need to trigger this bug two times in a row with the exact same block type to not lose any blocks (I lose the wood block while showing that off in the VoD).
I've been having this glitch a lot while opening/creating multiple worlds without restarting the game (snapshot 15w37a) in between. If I save while having this state, the world will have it permanently (tried creating 2 worlds, restarting and opening the newer one). The first world I play (unless it already had that state saved) in that snapshot seems to be fine and I also do not have this bug in 1.8.8 at all.
It should get a proper fix, because the driver version I currently have is already required by different other games that I'd prefer to keep working fine. Also this is actually a compatibility issue with AMD graphics cards that needs to be either noted in the System Requirements or get fixed, when releasing pay2play games, as this is game breaking unless you fix it yourself.
Side note: AMD graphics card suck for gaming, will buy nvidia card for next PC.
EDIT: I just read the "Chunk distance over a level the graphics card cannot handle" part...I have 120fps locked stable with my graphics card. I don't think it has any trouble with the render distance at all.