Adventurer 1 is hiding.
Adventurer 1 sees Adventurer 2 walk in the room.
Adventurer 1 throws a tiny rock or makes some weird sound or something at Adventurer 2. Not to attack Adventurer 2, but to alert them that he's there.
This makes no less IC sense than being able to jump out of hiding, punch a critter in the chest, and then hide again while standing right in front of the critter you just punched while they have no idea where you went.
Plus, the person using obvious hiding can still have their kills stolen, because people can just ignore the fact that they know someone is there hiding. I've done it by accident plenty of times, since ;wander doesn't always keep moving when you pass through a room with someone obviously hiding.
If obvious hiding worked like the proposed PP flag, then if you're in a room with someone who's using obvious hiding, you either wouldn't be able to attack anything in the room, or you wouldn't see any critters in the room.
And even then, that person is still actually hiding. Getting "H2U's containers are all closed." while your containers are wide open and you're standing there juggling gems all over the place would be dumb.
I don't really give a shit overall what happens with this since I forget for years at a time that I'm trained in PP, I just think most of the pro-flag arguments are from people being too lazy to use any of the already existing 84032478302 tools in place to prevent and deter pickpockets.
People will deal with shit like mastering alchemy, which is apparently a massive inventory management nightmare (I never bothered with it because fuck that), but can't be bothered to close a container, which again is just an extra command added onto a macro, or an extra line of code on a script for 99% of situations.