And with this DM, it appears you can only hide when no one can see you. Even when the rules say that a halfling can attempt to hide when obscured by a creature one size larger. The ruling is 'attempt to hide' = you fail because even though you are obscured, the creature can still see you.
Now we have degenrated into what 'attempt to hide' means. It pretty clearly means that the character can make some sort of check. It is also pretty clear that a halfling who has Naturally Stealthy is obscured and can make a check. Advantage/disadvantage may apply and the creature may be able to use active rather than passive perception in some instances.
You may not remain hidden, but you are allowed to hide behind an ally in this case. If it is clear you are hiding behind an ally, a creature could still target the space but cover could apply.
http://community.wizards.com/forum/rules-questions/threads/4148631
Part 1 Hiding:
When you want to hide, you make a Dexterity (Stealth) check. This check is against the Passive Perception (determined by each creature's Wisdom score, more on this below) of creatures around you. Several factors revolve around becoming and remaining hidden. Sight and Noise being the most common.
What does hiding get me in general?:
-Advantage on attack rolls against creatures you are hiding from.
-If you manage to beat a creature's Passive Perception score, you are considered hidden from it. Creature's who can't see you have disadvantage on attack rolls against you. This is true weither the attacker is guessing the target's location or if it the attacker is targeting a creature it can hear but not see (an invisible one for example). If the hiding creature is not in the location that is targeted by the attack, the attack automatically misses.
-There are many more benefits possible depending on your class, race, etc... Monsters also have many unique abilities and features that player characters cannot access easily if at all.