Not sure why it would be any less strict...this definition, for whatever it is, clearly refers to operator AND observer both having VLOS, not one or the other, as well as defining exactly what that means...if you literally can't see it then you can't know exactly what it's doing.
Leave it to the FAA to be confusing.
According to the FAA, this is what applies to hobby flight. It is different from commercial flight as with commercial flight, the FAA is creating the regulations:
https://www.faa.gov/uas/media/model_aircraft_spec_rule.pdf
Although the FAA believes the statutory definition of a model aircraft is clear, the FAA provides the following explanation of the meanings of “visual line of sight” and “hobby or recreational purpose,” terms used in the definition of model aircraft, because the FAA has received a number of questions in this area. By definition, a model aircraft must be “
flown within visual line of sight of the person operating the aircraft.” P.L. 112-95, section 336(c)(2). 1 Based on the plain language of the statute, the FAA interprets this requirement to mean that: (1) the aircraft must be visible at all times
to the operator; (2)
that the operator must use his or her own natural vision (which includes vision corrected by standard eyeglasses or contact lenses)
to observe the aircraft; and (3)
people other than the operator may not be used in lieu of the operator for maintaining visual line of sight. Under the criteria above, visual line of sight would mean that the operator has an unobstructed view of the model aircraft. To ensure that the operator has the best view of the aircraft, the statutory requirement would preclude the use of vision-enhancing devices, such as binoculars, night vision
goggles, powered vision magnifying devices, and
goggles designed to provide a “first-person view” from the model. 2 Such devices would limit the operator’s field of view thereby reducing his or her ability to see-and-avoid other aircraft in the area. Additionally, some of these devices could dramatically increase the distance at which an operator could see the aircraft, rendering the statutory visual-line-of-sight requirements meaningless. Finally, based on the plain language of the statute, which says that aircraft must be “flown within the visual line of sight of the person operating the aircraft,” an operator could not rely on another person to satisfy the visual line of sight requirement. See id. (emphasis added). While the statute would not preclude using an observer to augment the safety of the operation, the operator must be able to view the aircraft at all times.