Being right next to the cliff is the culprit I suspect. You normally shouldn't be able to set it down there. If you looked from the other side of the cliff, it would be sticking out of the middle if it were a log or other longer item.
It might have been set down just at the edge and position was recorded funny by the server (just a wild guess... I think I read the new coordinate system got pushed to live), but most often this is seen when someone drops the item due to getting booted offline or logging out while carrying something overhead, chopping a tree to fall over a cliff, etc.
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Yeah I'm pretty sure too it has to do with the cliff, I've never seen this happen anywhere else, or ever for that matter. However, all I did to get it where it is now was to drop it like you normally would.
It does not stick out on the other side of the ledge.
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