So apparently this is something the Editor does in PIE natively.
If you have half of an object invisible and the other half of it visible via material masking, the half invisible is ignored and when you click inside the editor whatever is visible gets selected.
However at runtime, the above is not the case. Instead at runtime, when you click and do a line trace, it will just resort to channel/object configuration.
How to get line traces more like the editor when it comes to material masking/opacity?