The selection overlay is off-placed with distance from the spawn, becoming noticeable within several thousand blocks from the spawn. The slightest disturbance in position of the pointer on a block causes the overlay to jitter and distort randomly.

Tested in creative mode, using both the infinite and flat world types. Levels used were generated over various releases (0.9.5 through 0.13.1). Prior to 0.12.1, the issue caused the highlighted area to z-fight.
Shown is a sand block selected at > x=100,000 and stone at > x=5,000,000. Notice that the highlighted area extends off to the terrain in the background around the block's edges.