I'm tried to set it even to 256, but dropped items still stop rendering in ~16 blocks away.
Maybe now it's hardcoded in client?

No plugins or datapacks and default spigot.yml except for these settings:

entity-tracking-range:
  players: 128
  animals: 128
  monsters: 128
  misc: 128
  other: 64
entity-activation-range:
  animals: 32
  monsters: 32
  raiders: 64
  misc: 32
  water: 16
  ...