The Bug:

Mobs don't panic when burning if standing on blocks placed above water.

This issue was not present in 1.18 Pre-release 1. Below, I've attached two videos that demonstrate the difference in behavior in 1.18-pre1 and 1.18-pre2.

Behavior in 1.18 Pre-release 1 - MC-241672 - 1.18-pre1 Behavior.mp4
Behavior in 1.18 Pre-release 2 - MC-241672 - 1.18-pre2 Behavior.mp4

Steps to Reproduce:

• Summon some blocks above a large area of water.

• /fill ~ ~-3 ~ ~15 ~-1 ~15 minecraft:polished_deepslate
  /fill ~1 ~-2 ~1 ~14 ~-2 ~14 minecraft:water

• Whilst standing in the center of the platform you just summoned, summon any mob that's burning, for example, a goat.

• /summon minecraft:goat ~ ~ ~ {Fire:100s}

• Watch the behavior of the goat closely.
• Take note as to whether or not mobs panic when burning if standing on blocks placed above water.

Observed Behavior:

Mobs don't panic when burning if standing on blocks placed above water.

Expected Behavior:

Mobs would panic when burning if standing on blocks placed above water.