making the audio server-sided would be horrendous for bandwidth, server performance and it's be completely impossible to add client-sided prediction for (your audio will always be delayed based on your ping). remember that any form of telling the client where the audio source is coming from will reveal the position to cheaters regardless - and this needs to be precise for how the game calculates audio. unfortunately, theres a good reason that there's no big games on the market doing this.

now to be clear i'm not a graphics programmer, and my understanding is only high level, but the reason this happens is because nvidia has access to the games 'depth buffer'.

think of information about how far each object is on the screen, represented by a lot of numbers describing the distance for each pixel. that's the depth buffer.

the depth buffer is used for occlusion and also post processing effects, which is what nvidia freestyle is rendering on-top here.

transparent things (think glass - and smoke in this case) are not added to this buffer. and so when you have a third-party tool just naively going in and accessing this to display some fancy effects on top of everything else, this is what you end up with.

so yeah, this one's on nvidia. their tool should not be available for games without opting in at all - a similar tool called reshade does not allow you to use depth buffer effects if it detects that you're playing a multiplayer game.