This is a bug. Items, mobs, entities, etc are occluded by a sneaking player's name tag. Seems to be GPU independent as I've also experienced this bug on NVidia. Additionally, it also affects on every graphic setting: fast, fancy and fabulous. This bug applies, but isn't limited to:

• Items held in hand and worn on head
• Piglins, pigs, glow squids, cows, players, and other mobs
• Item frames in their entirety
• Armor stands in their entirety
• Dropped Items
• Chests, beds, signs
• Particles