When a mob is given an item and the mob equips or picks it up it becomes persistent in the world and will not despawn naturally. One of the largest contributor to entity lag in minecraft are persistent mobs, and modded makes it worse by adding and spawning more mobs.
LMD tweaks the despawn check to allow mobs that pick up or equip items from the ground to naturally despawn like any other mob. Any picked up or equipped item is dropped back on the ground when the entity despawns to make sure you don't lose your items incase the mob picks them up after your death.
You can still prevent mobs from naturally despawning by naming them with a name tag.