Occluded terrain (caves, underground lakes, etc.) become visible when looking through the top surface of water. The visual bug disappears once the player's vision is under the water. This occurs in every body of water in a singleplayer world regardless of location or biome.

Versions & Modlist

Forge version: 1.16.5 - 36.1.24
IE version: 1.16.5-5.0.0-135
Other mods: None (world generated with other mods present, all mods other than IE removed for troubleshooting)

Are you using Fabulous graphics? If you do, switching to them should have shown a warning telling you that you should disable stencil in the IE config.

See #4466

I was indeed using Fabulous graphics, so that would be the issue. I added Immersive Engineering to an already-existing instance that was in Fabulous graphics mode, so the mod did not show the warning.