So here are some of my observations regarding this issue:

• For me it never happens when I just fresh started steam/dayz, found a server I want to play (that I knew could throw an error)
• However it can be quite often reproduced when I jump out of a game on a community server A and trying to reconnect to server B
• Restarting Steam fully resolves it (not just restarting DayZ). BTW those that do full PC restart - can you try to just get out of steam and go back?
• It feels almost like a timeout occurs while / when the game tries to resolve character state differences
• Retrying after a timeout often triggers another random error (most often a mod/add-ons mismatch error and its kinda clear that Dayz expects mods from thenew server I am joining while my client still points at previous server mod (I realized that by seeing which mods the game thinks I am missing)
• So the game incorrectly remembers the server’s mod setup, as if it kinda not flushing previous server stuff.

I wonder if launching Steam with -nodns (that supposedly disabled steam's dns caching) actually helps to resolve the above.
I will try this myself however I am not seeing this error that often.

Hey Geez, from tech POV i understand 'not an issue with the launcher', but we talk about player affecting bugs here. The case is clear - the ping is estimated incorrectly. Are you saying cause it 'is how Steam estimates ping' Bohemia's awesome engineers can't figure out how to circumvent that?
For example a) you could escalate to Steam tech support and at the least notice the issue for them (which I assume done/tracked somewhere), b) see if the client could bypass steam's ping/latency approach with custom etc.