It does explode a little bit above the ground by 16 units. Basically 1-2 feet in real world terms. This helps with situations were uneven terrain might affect the blast. As for nothing happening, you mean a direct hit to the head? Are you sure it hit it? Or was it just close? Bullet traces, used for scripted hit detection, ignore players in this case (others like sentryguns do not). Unless there is some strange situation where it actually explodes inside the player body. Which would be weird to say the least. As for how it calculates whether or not a player is hit, it uses the same code as cluster bomb airstrikes. So it does check for things like whether or not the player has a ceiling or other obstacle over his head. In which case damage is reduced 4X. When things work it is best to not reinvent the wheel.