Based on your setup instruction, it appears to be camera clipping that occurs on any mesh when the camera gets to close to it. If you need this clipping to be reduced you can adjust the camera’s near clipping plane when you setup your character, for the editor camera you would need to adjust the near clipping plane settings in the Default ini’s.
It is the Near Clipping that is causing the flashing you are seeing in your video. The Tessellated material is moving actual vertices into the camera’s frustrum (viewing cone) and you are walking the line when it flashes of some verts being in the Camera’s frustum and some being too close to the camera and the editor wanting to Cull the object out, but wanting to render it as well. Again you can adjust this by adjusting the near camera clipping settings in your player’s camera settings if you need you character to view that close.