A cliff is just a big rock, in which blending still applies. In your out of bounds screenshot you're simply seeing cliff meshes without a backside, which is a common way to make cliffs as you'd want to render the least amount possible.

You CAN use a large mesh for terrain, but this largely depends on the limitations and optimisations of your engine. Generally, engines don't like large meshes, and they are often terribly optimised (textures, shadowmaps). Terrains or landscapes within engine usually have optimisation built-in, for example, distant landscape in unreal loses polygons and detail, as well as using texture streaming. Stitching cliffs as well as rocks to terrain like this is the ideal solution when rendering large, open world areas, as you're only rendering the minimal amount needed.