Entities within activation range (but further away) are not ticking

Expected behavior

An entity within activation range should be ticking as normal.

Observed/Actual behavior

Following setup:

• fresh new server/world
• server.properties unchanged (therefore view/sim distance = 10)
• all configs unchanged except activation/tracking ranges in spigot.yml all set to 500

Entities not so far away are not moving.
(The pigs in the video are about 32 blocks away, well within the 500 block activation range)

https://github.com/user-attachments/assets/1f96ce3f-58b2-4921-a350-1fcd048e2ca7

When I move closer, they activate:

https://github.com/user-attachments/assets/faf5a2b5-6b93-4cb2-9921-9d91a8990763

Added bonus:
If I set the pigs ablaze... they run for their lives:
https://github.com/user-attachments/assets/0842b6c8-958e-4232-9ab2-fd2d6106b52a

Steps/models to reproduce

See above for setup.
Just log in, and look at how mobs are not moving.

Plugin and Datapack List

No datapacks, only plugin Im using is Skript, just for debugging (ie: fiery pigs)

> pl
[13:09:10 INFO]: ℹ Server Plugins (1):
[13:09:10 INFO]: Bukkit Plugins:
[13:09:10 INFO]:  - Skript

Paper version

[13:09:19 INFO]: This server is running Paper version 1.21.4-177-main@e5a8ee8 (2025-02-21T11:12:22Z) (Implementing API version 1.21.4-R0.1-SNAPSHOT)
You are running the latest version

Other

No response

Reproduce this on Paper 1.21.4-177 with a fresh world, unchanged server.properties, and activation/tracking ranges set to 500 in spigot.yml. Investigate the entity activation and ticking path; done means entities about 32 blocks away continue moving while within the configured activation range.