Essentially what is happening is the light is not being turned off when it it is below the landscape surface. This would need to be driven via Blueprints to let the directional light know that once it’s below a specific line it will need to be turned off and turned back on when above that line. This is why objects are illuminated below the landscape like that.
Luckily there is an awesome tutorial on our Wiki by Gregdumb that explains exactly how to set this up and use it.
Even more so, I’ve set up this project myself and made it available on my forum thread for all the mini projects I use or do while helping people on the AnswerHub which you can grab here:
If you have any questions or need help please let me know.