Prior to build 772, this would result in an object that could be respawned when thrown off the world, but would still be a Local pickup.
Now, the behavior is different in that, if someone who is not Master of the world picks up the Object, and lets go - it will lose physics.
If the master then picks the object up and let's go, it will fall to the ground on all clients.
If more details are needed, they can be easily provided.

This is fixed internally and will be in the next VRChat release.
@gg67: Was this released in the 2019.2.3 build?
Hi Xiexe - can you link an example world we can look at to see this bug in action?
@gg67: Sure thing! I'll have a World ID momentarily.
@gg67: Here's a link to the world on the website - The tablet that controls the projector in the world has the settings I showed above.
In fact, it's the exact same thing I screenshotted.
https://vrchat.net/home/world/wrld_62e99a36-ed47-4e71-9709-27e2087354b6
Same issue here if master is holding the local object it floats for everyone else till master lets go of the local object. (Not using object sync.)