So, if I've figured this out correctly, cover is only two things: 1) Light green if you're completely out of view of the enemy. 2) various colors depending on your distance from them. I'm talking about holding down DEL while scanning the map.

For instance, it seems there is no partial cover while standing at a waist high window. It's not as if an enemy's shot might hit the part of you that isn't exposed, and thus hit the house. It's as if you're as exposed as if you were standing out in the open.

I assume this means that the effective way to use cover is to simply try to trick the enemy to step into someone's field of view when they have enough action points to interrupt.

Now, someone feel free to set me straight, or explain it in more detail. I'm trying to get a grip on it all.

The colours show at which stances enemies will see you if you where on any given tile.

Green = will not spot you
Yellow = will spot you if you are standing (crouch or go prone)
Orange = will spot you if you are standing or crouching (go prone)
Red = will just plain spot you

That being said, there is always camo. If you are using the right type of camo (vanilla only has green/forest type camo which is only effective on grassy type tiles) then you may not get spotted immediately. The more you move on a single turn, the less effective your camo will be until your next turn.

Okay that is good info, thank you. Now that's making a lot more sense. I still find it strange if there's literally no reduced chance of being hit based on standing behind something, like a tree or sandbag.

Are you sure about that? I wouldn't say so based on what I've seen. My mercs tend to get shot to pieces if they aren't crouched behind rocks, trees etc. Often when they are under fire bullets meant for them hit the cover they are standing behind instead. At least with the 1.13 mod.

No I'm not at all sure. I just don' t see any visible indicators that something WILL reduce my chance of being hit. For all I know, that bush may count for something, or nothing at all. Or maybe there's no mechanics for it any of that. I just don't see any transparency.

Ah I see now. Look at page 32 of the manual. What Lenriak described regarding the stances is from a merc's point of view, and whether or not he/she can see an enemy on a certain square depending on stance. But that info you get when you press END instead. If you press DEL then you are specifically given info about protective cover relative to all known enemy soldiers: green being the safest spots and red being the least safe. The manual doesn't go into any more detail than that.

As for windows, if I want to set up an ambush by standing at a window, then either I prone right in front of the window and get up to crouch each turn (ie peekaboo) or I stand one tile away and to the right of the window (if I want to catch a guy coming from the right) with weapon drawn towards the window. Just crouching directly in front of the window can be very dangerous.

Other than that, if there is no cover available, going prone and facing the enemy also works very well. That is unless an enemy engages you from a direction other than the one you are facing. Being prone makes you an especially easy target for someone engaging you from a direction perpendicular to your prone body.

Imho, both displays only concern visibility, not actually cover (from bullets). And the "cover" display only take in to account current positions of known enemies only, so unknown enemies or any enemy position change can change things dramatically. Thus, your vision indicator is better proxy for cover in general - if you can spot on a square, chances are you might be spot and shot at from there as well.
However, things that hide you wont necessary stop bullets (grass, bushes) things that protect you wont necessary hide you (rocks, tree trunks).

Protective partial cover is definitely a thing though. Most scenery objects have a profile that can be hit. Also, bullets have stats and luck based chance to go though some objects (including walls in extreme case).

In vanilla (or 1.13 OCTH) every shot determined as "hit" goes to the dead center of the target, only a "miss" randomly can hit other parts of the target, thus cover sometimes may indeed feel binary - and to hit enemy behind a tree or rock it might be necessary to change position or you will hit the tree or miss completely most of the time, but going just one square to the side may expose enemy completely. In 1.13 NCTH all shots are always spread, making cover function more like you might expect; still, due to the nature of how objects are calculated similar effects can occur and it is not always obvious what gives (or not) cover for you from certain angles. Over time you will grow some intuition about it.

Ok I sort of had the feeling it was this way. Sort of like an "undeclared dodge bonus" when behind an object or window. I think DEL and END are indeed only indicators of visibility, which has its value. I just sort of wish I at least knew how objects compared to each other, though I can sort of guess. Like is a window better than a tree? Oh well, maybe I'll get used to eyeballing it in time.

No, it isn't some abstract bonus, the bullet flight path is actually calculated and if there is something in the way it hits that. This also had been said as reason true cover can't be really shown in an easy way - it always directional, and often partial in not trivial way.

Window, the portion of wall under it, will hide your legs if you standing, leave your head fully exposed when crouching (and AI soldiers are smart enough to only aim for parts they really can see), or block you completely if lay prone. The same is true for most rocks, only those rarely form continuous walls. Tree trunks give you high but narrow cover and probably bit wider near the base (but honestly, that's just a guess).

Merc body side profile area actually slightly increase when crouching in comparison to standing, but as expected is a bit lower (front is larger than side when standing, opposite when crouching). The difficulty with being prone (what gives you small frontal profile but still large side (and for some strange reason prone body haven't such target zone as legs)), or anything else for that matter, merc (or any other object) can only face one of 8 general directions and hit either from front/back or side, while bullets can freely fly at any angle.