When items are pushed upwards due to being inside a block, they can get stuck in a situation where they should be pushed out to the side.

In the clip and screenshot, the item stack is mostly in the water stream but has an X coordinate decimal > .875 or < .125, so it is also partially in the glass block alongside the water stream. Its Y is lower than the ceiling on the water stream, so there should not be anything stopping it from being pushed out of those glass blocks and fully into the water. Instead it is bounced back and forth between the two glass blocks on the side of the stream along the Z coordinate and does not return to normal physics behavior without breaking the blocks.

Reproduced by shearing a sheep that is fully encased with blocks, but can probably be done with an encased dropper/dispenser as well.