Banners will overlap with entity names, slime blocks, honey blocks, glass panes, and glass blocks.

If you'd like to recreate this for yourself, place any of the items listed in front of some banners.

As a mobile player, I've only begun experiencing this after the 1.18.30 update, which leads me to believe Render Dragon is the one to put to blame here. Some of my friends who use Windows say they've also seen this issue.