Overlap triggers while going over collisionbox as if it has infinite height

Ok, so everything works fine, overlaps register correctly etc. As I’m building a top down vertical scroller (Shmup) I tried to experiment with different heights of my actors (z). As it is 3d with perspective I try to eliminate some trade-offs making a game in this fashion. For instance, I like bullets to be on top of everything else, which means they need to be higher on the z plane so they don’t go right though body’s of ship/enemies and are always visible. I also like to have my ship a bit higher up so it’s always visible.

So, to make objects still trigger overlap, I thought about extending the collision box/capsule to whatever height is necessary to account for the z-height difference of all the actors. Following me?

But now comes the weird thing I don’t understand. Somehow actors already do overlap in infinite z-height, I don’t need to extend collision boxes. Two actors with small collision boxes still overlap even if they are on totally different heights far away from each other. They obviously don’t really overlap in 3d space, cleary visible when viewing the scene from the side. Is this perhaps a setting? Specifically useful for 2d games I might guess. The strange thing is, this wasn’t always te case as I had some objects (mainly pickups) dropped by enemies on a wrong z-height (should have been 0, but was -50), and I obviouly could not pick them up while flying over them. This suddenly changed, now it DOES work. The funny thing is, this behaviour is exactly what I wanted, but I don’t understand how it works. Can someone explain this to me?