To reproduce, simply have another player crouch/sneak in front of you and you'll notice how the white letters in their name tag get grayed out.

This seems to be "crosshair-specific" where the two points of the name tag meet each other right at the crosshair/center while a player is facing another player where if they were to be on one side, it would only gray out that side being where the player is crouching.

Due to upload limitations, here's a demonstration (YouTube): MC-195216