I have exactly the same problem as here: Landscape collision issue - World Creation - Unreal Engine Forums as yet unanswered.
I am using UE 4.7.6 and importing a simple 505x505 landscape from World Machine. When playing the standard third person character it runs through the mesh but does not fall into infinity but remains on what seems like an invisible “collision plane”. I can continue to play the character until he emerges through the mesh again. See image.
It seems this invisible plane tends to follow the visible surface albeit normally below.
I have checked both actors meshes are set to "block all "and playing from a player start. I have also ensured the player start is correctly aligned with the surface although if using the “End” key to drop the start onto a sloped surface the capsule component will sink approximately halfway through.
I do not get this problem with landscapes created within UE but I do with any WE landscape…
Is this a problem with World Machine/UE or am I missing something.