It actually can track the controllers when out-of-sight by reverting to the accelerometers. It is effective for a short amount of time. After, the imprecision accumulates and the positioning becomes very imprecise.
But, in normal use, the hands rarely end-up totally out-of-sight for long periods and this is why it’s never a significant issue with WMR. Far less than having to install and maintain emitters in a room. My opinion.