That's a bad example because Red Dawn are all spotters without exception. They also used to be all snipers as well, but the gangers were recently downgraded.
What happens is that if you hit someone who's not a spotter, you still get 'spotted', just not for the purpose of sniping. So no-LoS psionics, Blasters, etc are still fair game, but snipers can't get at you.
This is kinda moot, though, because everyone and their dog has spotters.
All in all, it's an unfortunate combination of OG mechanics that worked pretty well when alien squadsight was not a thing, but now we have these new mechanics that ohartenstein is adamant about not changing from his original vision while modders use the feature in ways that are not incompatible with that. And who can blame them, it's a shiny feature and aliens need to level the playing ground.
Xilmi/Ail has been doing his own AI that stumbled upon the same problem and removed this behaviour exactly because it felt cheaty, but since his project is all about the AI the enemies now have a clue and can outmaneuver and kill you so much more easily that his own foray into XCF was very short and bloody, if I'm reading his posts right.