I'm a little disappointed, but I have to admit, that according to Searge this isn't supposed to work. Regardless of the fact that this tag is applicable to all entities, it's just not meant to function the way it used to. Despite the fact that there was nothing wrong with the previous behavior where the name displayed forever, I'm willing to face the fact that this is the intended outcome. I really wish I could close this issue on my own, because I feel kinda stupid now.

Yes, this bug being reported previously. But it has been ignored and pinned as a duplicate of MC-57516 every single time it has been submitted. But issue MC-57516, doesn't address the problem at hand. Searge stated that:

"The CustomNameVisible tag does not work on animals and mobs, because they have different rules about showing the name. For the other entities it should work."

Prior to 1.8, however, the tag served a function on animals and mobs, whereas now it does literally nothing! I consider the unprecedented drop of a harmless feature an issue.

I tested 4 commands in order to display exactly what the issue is.

-/summon Zombie ~ ~ ~

{CustomName:"Please Fix This",CustomNameVisible:1}

-

This spawns a zombie whose name only displays when you look at him. Now, Mog mentioned that:

"Clearly CustomNameVisible is working if it shows when you look directly at the mob. Looking at the code, that's how it's worked since at least August of last year."

Well, then something must be wrong here, right? because if you use the following command:

-/summon Zombie ~ ~ ~

{CustomName:"Please Fix This",CustomNameVisible:0}

-

You get a zombie that obeys the exact same behavior as the previous one. This means that this tag has absolutely no significance now when applied to mobs.

Meanwhile, on item entities, the tag functions as expected.

-/summon Item ~ ~ ~

{CustomName:"Please Fix This",CustomNameVisible:1}

-

This spawns a stone block that always displays its name, no matter where you look.

-/summon Item ~ ~ ~

{CustomName:"Please Fix This",CustomNameVisible:0}

-

This spawns a stone block that never displays its name.

If this issue is labeled as a duplicate of MC-57516, I will be very disappointed. MC-57516 has been resolved - this issue has not.