Bacon Bits
Legend
By the rules, backstab was very hard. By the DM...it ranged from "oh yeah, sure go ahead" all the way to "if you can perform a triple backflip while on fire, and can reach the vital nerve area on the dragon's body 8' above you, there's a 23% chance you can backstab. Then the dragon will eat you. I think that's a fair ruling."
Yeah, my experience was that the victim had to be unaware of you. You had to move silently, hide in shadows, or be invisible. Which is ironic because it means the best backstabber is now the thief/magic-user with improved invisibility, and as an added bonus you get lightning bolt, mage armor, charm person, silence, knock, detect magic, alter self, etc.
Your description also seems to apply to how racial level limits worked in actual play. In my experience, every table 100% enforces racial level limits... at level 1. However, when you actually have PCs hitting the limits, the DM magically forgets that they exist. Or, sometimes, applies a penalty. 10% to 20% XP penalty seemed to be standard in my area. Because stopping progression was obviously dumb. It meant you should just retire, and neither the player, nor the rest of the party, nor the DM were ever interested in that.