Affects Version/s: Minecraft 1.8.1-pre3
Fix Version/s: Minecraft 1.10.2
Windows 7 Home Premium x64
Ambient occlusion in model files treats every cuboid/element as if it goes from model coordinates 0,0,0 to 16,16,16 of the block it is rendered as a part of. This causes massive visual artifacts when they aren't actually in that situation. Occurs on both fast and fancy. Only when ambient occlusion ('smooth lighting' in video settings) is turned on (fast or fancy both work)
The bed screenshot uses a custom model file so that both visual halves of the bed are actually rendered as part of the head end (shown covered with stone) of the bed. The fence gate uses the vanilla built-in model file, there is no resource pack selected.
Steps to reproduce (hooray, finally included this in one of my reports):
1. Set brightness to moody
2. Turn on smooth lighting
3. Construct the arrangement shown in the picture (the block to the side of the lower gate just casts an ambient occlusion shadow, which makes the effect visible)
4. Compare the middle top part of the fence gates
This effect can also be seen with flower pots after enabling ambient occlusion in the model files.