Fascinating. Or weird.

Seems like an one-off that can happen if the settlement is placed at the altitude of a lower poly model which is usually higher than the detailed version. Most often happens if you're zooming around the planet fast or crash into it from afar or glide from a specific direction.

It could also be something that requires a specific graphics settings and hardware combo to happen too.

I haven't been able to replicate it here or anywhere where I've had it happen randomly reliably. Except for Traders Rest where it always happens to some hills a bit further out from the settlement.
 
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Seen it a long time ago, not since I got my new PC though, may have to visit and check it out and see what happens.

Edit: Yes it does indeed seem to be in a hole for me as well, it's consistent for different players. Was deserted when I got there but then some guys turned up and started shooting so I left.
 
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