According to the folks at 9to5Mac, they discovered that when the monitor is placed within several feet of a router (~48 inches), it would constantly disconnect from the MacBook and in some cases, and even froze the MacBook in the process. It was also discovered that they are not alone in their discovery as some of the negative reviews of the monitor have also suggested that close proximity to routers might be to blame.
LG seems to be aware of this because when 9to5Mac reached out to them, they were told to ensure that the monitor was not placed near a router, and this suggestion was made without them telling LG about their initial suspicions. LG has recommended that users place their monitors at least 2 meters away from routers. They also say that this only affects the new 5K monitors and not other models.
It is unclear if this is a software issue or a hardware one since LG has yet to officially comment on it or if there are plans to issue a fix or maybe an exchange, but for now if you are encountering the problems described above, move your router out of the way (if possible) and it should fix it for now.
Update (Feb 3 2017): LG has contacted Ubergizmo with the following statement:
“We have been made aware that the LG UltraFine 27-inch 5K display (model 27MD5K) may experience performance issues caused by signal interference when a Wi-Fi access point is positioned behind the display within a distance 2 feet (0.6 meter). Changing the location or positioning of either the router or the display should resolve the issue. Customers continuing to experience issues with their UltraFine displays are advised to contact their nearest LG customer center for prompt service. LG apologizes for this inconvenience and is committed to delivering the best quality products possible so all LG UltraFine 27-inch 5K displays manufactured after February 2017 will be fitted with enhanced shielding.” (LG Korea)