Is this part of the degradation feature, or is this a bug?

https://imgur.com/a/fNEb8

That depends entirely on what I'm looking at. However I'm fairly certain (this has been heavily tested) that tree spreading from my mod does not cause this if the setting "Minimum distance to player entity" is left at its default of 2.

I do however know that it actually is possible to place tracks like that around an existing tree but the condition in which this can happen is very rare and relies on mods changing the collision boxes of trees.

Yeah, sorry, it was the tree seemingly growing up through the tracks. I laid down the tracks using the ghost track planner while holding Shift so it'd mark obstacles for deletion then ran back through with bots to do all of the work. Admittedly I didn't immediately go back through to verify the integrity of the work (the trains ran, so I knew the tracks made a solid connection down through :P), but didn't notice anything out of the ordinary like that until later. Then I noticed several.

I do have Alien Biomes loaded which does change the collision boxes of trees, though. I'll have to pay better attention next time now that I'm aware.

Ok so that tree did not spread into there then but rather it was already there and due to the collision box being smaller the bots did not see a need to remove it?