He’s behind you!
Oh no he isn’t!
Oh yes he is!
Sound like a Christmas panto? Sadly it’s Dungeon Saga.
Q: When is a model behind another?
A: When all the squares covered by its base are in the area marked behind in this diagram. In other words, the model must be entirely behind the red line. The red line in question is a continuation of the line dividing the front and rear arcs of the target model, in this case a Hero facing the top of the page.
If any of the squares a model covers are in the area marked in front then it counts as being in front of the target.
Quirkworthy 
And to be clear if the rear of the model can’t be seen (up against the wall or an obstacle) and the attacker can only see the side but is behind the line, then it still counts as a rear shot?
It still counts as a rear shot.
Yup.
Perfect, Jake ^^
So the FAQ needs to clarify that the -1 shooting modifier applies when the shooter is “behind” and not, as currently, in the “rear arc”?
I believe that is the intent of the rule since there are no point blank shots allowed per the last DS discussion.
Yup.
This latest clarification by Jake (thanks Jake) is exactly how I have house ruled. I guess most experienced players would eventually get to playing it this way anyway, but for players new to gaming, this is a VERY critical piece of information that is missing from the rulebook. This concept needs to be explained by diagram in the rulebook so that it is explicitly clear.
@Nick – I agree, this is how I have been playing it, and again, it is a VERY critical piece of information that needs to be fully explained in the rulebook, especially so for players new to gaming.
@Chris – Like the others have commented here, I believe the situation you describe would count as a rear shot.