I see. That behavior is more or less expected in that case. It seems like you are creating a layer of water that is <1 voxel thin in most places. It works “as expected” if so, as the LOD imprecision in terrain causes z-fighting in the distance in that case. Also beware that water is technically positioned at 0.5 voxels (2 studs) below solids in the current system, and if you compensate for this, the problem might be less visible.
Not 100% sure though, as I can’t recreate the exact effect that you show in the video using the Paint tool though. I would expect this can be achieved by using add or SeaLevel or similar. Please provide more specific steps to reproduce (and/or an example placefile), if you can’t solve this by using the above information.
(Edit: Math typo. I wrote “>1 voxel thin” instead of “<1 voxel thin”.