Vextrove

After some further testing, I believe the inconsistent behavior may be the result of lag/lagspikes.
I can see how the game failing to sufficiently simulate the block moving away from the player in time before the item drop pickup timer runs out, could result in the player ending up picking up the falling block.

There is inconsistency. Sometimes, you will be able to pick up the falling block.

That's not what the report is about though. The issue is that the behavior is inconsistent. It's not a question of why the block is not picked up, because that is not always what happens.

I highly doubt this behavior is intentional/a conscious decision by Mojang. 

I also request the title of this bug report be changed to "Nether biome surface builder types incorrectly assume the world height is 128 blocks", because that is actually the root cause of this bug.

As soon as there are Nylium blocks for huge fungi and Nether forest vegetation to generate on top of, it will simply do so.

This bug happens because the surface builder types for Nether biomes assume the world is 128 blocks tall.
Other surface builder types - which do not make this assumption - do not have this issue.

This applies to these surface builder types:
minecraft:nether_forest
minecraft:soul_sand_valley
minecraft:basalt_deltas

Likely it also applies to minecraft:nether, but I have not verified this personally.

Please add this information to the bug report.

On top of that, it would be convenient to have a couple of labels added to the report as well, such as surface_builders and custom-worldgen.