Let me try to explain this again. I'm standing on a piece of ground. It is slightly higher than the surrounding terrain. Now normally as I move the hoe outward from my position I will see the vertical line at the center of the circles get longer. This indicates that the terrain is lower than where I'm standing and if I left-click my mouse it will bring that ground to my level, but only to a certain extent. If the difference is a lot it basically does nothing.

Now, what is happening in my game is that if the ground I'm on is higher and as I move the hoe outward to lower terrain there is no vertical line and if I left-click it lowers the terrain covered by the circles to the lower level, not to the level I'm standing at.