Arma is about realism, in real life you see someone in the distance and have to confirm its an enemy or friendly before firing.
A good way to be able to tell a difference is by looking at the type of weapon and gear they are wearing and also by checking your map.
@xCryonic To be honest in real life if I'm getting shot at and my main gun isnt working I'd drop that shit on the ground and pull out my pistol in an instant
@ExploitedYouth - You win two Arma cookies.
This would be great! Even a very minimalistic one. Doesn't have to show the whole character as others do.
+Vote
EDIT: What it might be is the setting that prone-ing when a grenade goes off increases your chances of living. You survive if you're prone regardless of the distance of the grenades