Got it, went ahead and reopened this.

I'm deleting the link to MCPE-344. Even though the result is the same, the causes are different in those two cases.

This is unfortunately no "weird bug", it's just the level that's become a bit corrupt. The problem is that the seed has for some reason been written incorrectly, and for as long as we have seed-based client generation (I've some plans on changing it), it wont fix itself. Unfortunately there is no perfect solution to worlds like this (unless you know the exact seed), but a few non-optimal ones. For instance, one "solution" is to send it back and forth between two devices, both times choosing "Quit and copy map". Then the map will look like the rightmost screenshot for all players (if you have any way of choosing seed, you could probably find one that looks good, since all buildings are saved). In current nor next update, there is no way to "fix" those worlds ingame. Next update will hopefully make levels slightly more robust however, but that ain't helping your world.

Everytime we play multiplayer it happens when the joiner joins.

When i make a new world with a new seed the bug is gone. And i only used the bugged map since 0.3.0

The problem is that there is extra terrain that the joiner is not supposed to see because its not in the real world.Like if it generated wrong when he joiner joined.
In 0.3.0, multiplayer worked perfectly for a while but after a while in 0.3.3, and 0.4.0 it started to act weird and buggy.

I created a seed "Mithos Territory" and hosted it. Both server/clients can see each other, and can see whatever is being built. Mind you, it was created on 0.4.0. I'm not sure if 0.3.0 has something to do with it. Hopefully one of the devs will have more insight into this problem.
Is the problem consistent? Is it only happening on this seed? Do other seeds work ok? How about other 0.3.0 and 0.4.0 maps? Just trying to see if there is any pattern.

Yes we can see each other build and walk. Its just that the person who join, the world generates a bit different than it supposed to.

The original name of the world is Mithos Territory

FYI, I just hosted a 0.3.0 map on iPad, and the host/server could see what each person was building. This may be a seed related problem. Does the server see the hosts walking around them?

If you leave the seed name blank, the name you assign the game will be the seed name.

The photos is in the attachment settings

The first photo with the iron sword is the correct way the world is supposed to be, and only the hosts see it like that.

The second photo with only his hand showing is the second player who joined. That "Invisible mountain/wall" is around the whole world.
The host and joiner sees the same world differenty.