Gravestone tried spawn in a water block and therefore broke, I would assume.

gravestone "spawned" at death

apparent location of "spawn"

empty gravestone placed down, after picking up from floating on top of the water. breaking it only pops it as an item.

Nice. It's probably the exactly same thing. :D

UP, Came here to say the same thing. A player on my server got the same issue.

Someone made a pull request for an update to 1.20+ and someone else made a pull request to that to fix lava/water proofing of graves. Here is the repo, you can either clone and build it. Takes like 15 minutes if you know what you're doing.
Or you can download this. You have to rename it from .zip to .jar tho since GitHub doesn't allow jar files.

gravestones-v1.15.zip

For the moment i just downloaded and put on the server side this mod

I tested it and it worked great !

I had this just happening to me. Is all my stuff basically gone?

I had this just happening to me. Is all my stuff basically gone?

Yep :/