Right. Most posters seem to take this as "obscured" in the colloquial sense, not the game mechanic sense. It's more like they can hide with half-cover from another creature larger than them (there's no rules mentioned for interposing creatures giving any other kind of cover, regardless of size difference.) Again, still rather muddy, but seems to be the common interpretation.
Melkor's example would still apply to an wood elf lightly obscured by bushes, though. However, in that case, it's pretty clear even the Passive Perception check should have disadvantage for the initial Hide attempt. It's just the DM has to remember to do it. If the elf snipes and hides in the same spot, it'd be reasonable to have the disadvantages cancel out - it's harder to see through the bushes, but the target has a pretty good idea where to look. Hide and Perception are both rolled normally.
That would make it easier for the elf to hide in a lightly obscured area than a heavily obscured one. I don't think that was the intent of the rule.