This bug appears to only affect hostile mobs. Basically, when they are out of the sight limit (I have this configured mid-way, so the 3rd tick in the settings), they disappear. I went up through the clouds and back down as an example. The images are in reverse order. In the 4th image you see peaceful and hostile mobs. In the next two the player zooms up, the hostile mobs disappear first, then everything. Upon returning down, the first image shows only the peaceful mobs remain.