Entities turning black at eye level Y>=256

If the player or any entity goes to or above Y=256 their entity model suddenly becomes darker. The player's vision also darkens. I figured this out by making an ice farm at the building limit when I realized my player model became dark. This happens in any world or biome.

What I expected to happen:
Well, not to do that, I guess.

What really happened:
The player entity model darkened.

Here's a screenshot I took of the issue: