Let me begin by saying that I allow the halfling rogue in my campaign to hide in combat behind a medium sized opponent, turn after turn. If a target is able to specifically watch the rogue without distraction (attacking someone else, or having to defend against an attack) the rogue is at disadvantage to hide. I do make the rogue beat the targets active perception in all cases where the target is aware of the rogues presence (they use passive in situations where they are surprised, or unaware of the rogue). I give the rogue sneak attack when they pop out to attack if they have successfully hidden.
I see a lot of people making a simulationist argument with regard to hiding. It is sort of amusing really. Flying horses, balls of fire shot from fingertips, demons and undead walking the earth, hacking at someone 4 times in 6 seconds with a sword, etc. None of that is a problem, but allowing a halfling to hide behind a human? Totally unrealistic!
I guess my point is, this is a fantasy game. Characters are supposed to be able to do things that are outside the realm of realism. When you watch Legolas walk on top of the snow in LoTR, is that a problem? How about Halfling Luck? Or, Lucky feat? Zero basis in reality, but they make the game more interesting by allowing characters to do things outside the realm of reality.
The fantasy rogue is sneaky. That is their thing. Why deny them what is arguibly the defining characterstic of their class while still allowing fireballs from wizards and multiple attacks from fighters (both of which are equally absurd).
It is my belief that my interpretation is closer to the designers intent than many others which have been posted. Of course, we will all have to wait for some sort of future clarification to find out for sure.
The one thing I do know, it is much more fun to play a rogue at my table that at some of the others I have read on this forum (also, I don't find it particularly unbalancing to allow repeated hide attempts given the rogue usually has an ally within 5 feet anyway).
Does the Halfing rogue say, "Surprise, bitch!", every time he jumps out from behind someone?