This is a MOTOR problem. NOTHING else.
Update: Motors that can have this problem: SS x2212 980kv, SS x2814 1000kv
This issue is NOT NOT NOT a flight controller problem AT ALL. Nothing to do with receiver, battery or any settings. This issue is PURELY a MOTOR problem but we have no idea why the motor causes this.
Would have never guessed but if anyone else has this issue and comes here looking, try different motors!
We eliminated every component one by one. When we plugged the ESC/motor directly into the receiver and tried using it as an old fashioned ‘dumb craft’ it did exactly the same thing. I then tried a different motor and it was perfect! So then we tried various ESC firmware versions of SimonK and all do the same exact thing. I went so far as to just plug in one ESC into the Naze32 and checked the motor levels on arm and throttle from the transmitter. As soon as a motor is plugged into that one ESC or any ESC the levels begin to flutter. All the levels begin to flutter, not just that one ESC with that one motor. If there are fully functional motors plugged into the other ESC’s they will all still flutter. It seems like there is some sort of feedback issue with the motors.
We were using SunnySky X2212 980kv motors but due to the extreme popularity of this motor, there are several fake versions out there. At this point I have personally tested over 30 of these motors since the initial time we ran into this issue. Roughly a third of them had this issue to varying degrees. It seems the quality control on these motors is just about non-existent as they don’t even work anymore.