I'm having the issue on an AWS VM, which would be based of their
customized Xen hypervisor.

An AWS engineer replied with the following:
The private IP being released (at-least appears in messages) [is not the case], 
we checked the DHCP server of the instance to see if the DHCP client of the 
instance is sending the DHCPRequest or not. Based on the investigation and 
logs, I can confirm that the DHCP client of the instance i-###############3 is 
requesting the private IP 172.xxx.xxx.xxx of the instance via DHCPRequest and 
get the renewal successfully via DHCPAck. Having said that, it appears that the 
IP address is not being removed, it just that avahi detected that the IP 
address has been removed, and is changing its internal state in response and we 
need to look further.

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https://bugs.launchpad.net/bugs/1586528

Title:
  Avahi-daemon withdraws address record

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