LOS - is it bugged?

Minhx is right. Anything that is “normal terrain” never obstructed LOS. If it obstructs LOS, it has to be an extra model on top of the normal terrain. Not all models break LOS though. Any hill in the classic world is made of normal terrain. I think most rock/boulder models that you can find on hills also don’t break LOS, but there might be exceptions there.