AoE effects appear normally on terrain/ground that is flat (or sloped).

When there are obstructions, rocks, or varying angles in the path of the effect, the red will often disappear under the obstruction.

Rather than being projected 'from the top down' so to speak, it seems that these red outlines are projected in relation to the most immediate texture that the target is standing on. Therefore, the red effect will appear normally on continuous textures, but struggle if there are objects on top or in the way.