yup, arma's visibility checking is dumb and the method we have is the one with the lowest failure rate. If you ever find yourself wondering why an ai can't seem to see you even though you're close or, on the flipside, why an ai can see you from a spot they shouldn't be able to, that's why. The alternative is either a distance check which relies on ai pathfinding to actually get them to walk far enough away (lol good luck) or the previous system where civs would not despawn, meaning it could only have 4-5 in a town at a time to save performance. There's also another method where it despawns civs when you leave town, but again you're limiting the amount of civs you can spawn severely.

As for prisoners, they run on the same checks because people were trying to intentionally lag people out by taking everyone they could see prisoner and then leaving them. If you want them to stay then put them in a vehicle.