Possibly when it is worn. The differential side gear shims are probably worn which causes the in and out play. Side to side would be caused by either a worn differential housing bore or worn drive flanges. Since the drive flanges are hardened I would probably be the differential housing bores. I have a 944 016 in my garage now with almost no noticeable play either way. I have replaced the side gear shims before because they do wear. I haven't seen one with side to side play of that much though.
The shims are cheap but you need to remove the differential to replace them.