Each unit has a vision range. In missions with Fog of War enabled, anything that falls beyond that vision range is obscured by the Fog of War and cannot be seen. Units cannot attack units that are beyond their vision range.
Infantry and Mech Vision Ranges
Infantry and Mech units normally have a vision range of two, meaning that they can see two spaces around them. When these units climb a mountain, their vision range increases by three spaces.
Ambushes
In Fog of War battles, a unit moving to a space outside its vision range may encounter a hidden enemy unit. When this happens, that unit is ambushed - it stops immediately and cannot accept any more commands until the next turn.
Weather
Vision through Fog of War is decreased by one space during rain. Vision is not affected by snow or sandstorms.
Hiding
In forests, reefs, mist, allied or neutral properties, and ruins, units are able to hide and avoid sight in Fog of War (or rain, depending on the game). Only allied units and units beside those terrains can see them.
CO Specialty
Sonja's CO power, Enhanced Vision extends her units' vision range by one and allows them to see into forests and reefs without being adjacent to them.