Squads on Hide will still take peeks
This explains why squads lying prone on 'Hide' in buildings, behind walls or in shrubbery etc can still spot the enemy.
This Russian squad is on Hide in thick woods, and if we monitor the status of individual men on the readout at bottom left, we see that the status of some of them keeps randomly changing from 'Hiding' to 'Spotting' every few seconds as they keep abstractedly raising their head to take a peek to keep tabs on the enemy's whereabouts.
It also explains why the enemy can spot squads who are Hiding, as they keep seeing heads randomly popping up-