Flamestrike
Legend
I interpret the stealth clarification as follows:
(i) DM decides if you can hide. (ii) DM should ask himself, how clearly can the NPC see the PC? (iii) Most of the time they need something like half cover or pretty thick fog or lost of distraction or far away etc to try and hide.... But if it's a wood elf, less cover is needed - light fog might be enough for example, and for a Halfling, they also have a knack for hiding behind allies. (iv) Adjudicate and call for a stealth roll if required.
So MotW and the Halfling ability are still useful. Those races will have opportunities to hide more often than the others, coz they're better at it.
Thats pretty much it.
The racial abilities of the halfling and elf only come into the picture after the DM determines if the elf or halfling can be seen 'clearly enough' (assuming of course the Elf and Halfling arent already hidden!). If the DM determines that they cant be seen 'clearly enough' they can attempt to hide.
The racial abilities only change what they can hide in after this step is complete.
A human or dwarf needs to (1) First ensure no-one he wants to hide from can see him clearly enough (DM's call) and then (2) block LOS by moving into total cover or concealment (if not already in it) and then (3) make a Dex (stealth) check to Hide as an action (or bonus action if Rogue). Wood elves and Halflings only alter step (2) - they can attempt to Hide in light natural concealment or behind a medium creature in addition to what other races can hide in.
The abilities expand the types of terrain and features that a Halfling and a Wood Elf can hide in. They dont removed the prerequisite that the halfling and elf must not be able to be seen clearly before they make the Hide attempt.
Example: A Wood elf in the rain (that is not currently hidden) is facing an Orc 30' away. Both parties are aware of and warily watching each other.
In this case it is most likely the Elf cannot take the Hide action (despite being in light natural concealment due to the rain). The Orc is watching him intently and can see him 'clearly enough'. The DM could rule that the rain is so heavy that the Elf can Hide (i.e. he can rule that the rain itself obscures the Orc's vision to the extent that he cant see the Elf 'clearly' enough).
Assuming the Orc is distracted (say an arrow flies at him from just behind his right shoulder and he turns away from the Elf briefly or stops giving the Elf his undivided attention) the Elf can almost certainly attempt to hide in the rain (the Orc is no longer able to see him clearly due to being distracted, and the Elf can now attempt to hide in the rain).
Take the example of a halfling standing adjacent to a human fighter. Another Orc stands 30' away watching the two.
The halfling cannot attempt to hide as the Orc can see him clearly enough at the start of the halflings turn. He cannot 'go into hiding' as he is being observed - note even by using his movement to duck behind the fighter he will still not be able to take the Hide action' the Orc watched him go there and knows where he is.
If the Orc could not see the halfling clearly enough at the start of the halflings turn, the little bugger could attempt to hide behind the fighter.
If you cant Hide on your turn I suggest readying an action to do so (once the Orc is distracted).
The main change is it used to be if the creature could see you. Now they need to be able to see you 'clearly enough' meaning that 'Jack in the Box' rouge is possible as long as the creature in question cannot see you clearly enough during your attacks. If he can see you clearly enough (likely once you shoot him in the face with an arrow) you cant then attempt to re-hide unless he is sufficiently distracted.
The errata also expressly makes the rule DM's call (which it was anyways but hey). RAW is 'ask your DM'.